From today you can request a break to pay off your home loan. But what exactly are the advantages and disadvantages of such a delay? | MyGuide

A mortgage loan consists of principal and interest payments that you owe to your financial institution at agreed times. Let’s say you get a home loan from your bank for €220,000, with a fixed interest rate of 2.15% and a term of 25 years. According to Spaargids.be simulation, the monthly premium is 1,024.04 euros. In the first month, this amount consists of 669.19 euros in capital and 354.85 euros in interest. In the following months, the capital to be recovered increases step by step, while the interest decreases every month. Last month, you still paid €1,024.04, but that amount consists of €1022.23 in principal and €1.81 in interest.

Where can you find the best terms and interest rates for your mortgage loan? View different home loans here.

Those who get a deferment break soon after getting a home loan are at a disadvantage, compared to those who have had a loan going on for years. Because in the beginning, the amount of capital repayment – which is deferred – is much less than it was in the end. This leaves you with less money to pay your bills, including energy bills.

Reduce your energy bill by boosting your home’s energy performance? Read here how a free renewal loan can provide a way out.

Before making the calculation yourself, it is of course best to check whether you qualify for deferment of payment. After all, some conditions are quite strict:
• The home loan must be of your main residence in Belgium.
• On March 1, 2022, you have no arrears with the Central Retail Loan Center.
• On the day you request the deferment, you must have less than €10,000 in bank assets. This means that everything is added together in your checking accounts, savings accounts, and securities at all of your banks. Retirement savings do not qualify for €10,000.

Since the bank offering your mortgage loan does not have insight into your financial situation with other banks, you will have to sign a statement of honor. Another requirement is that you have an existing payment plan or have applied for a payment plan from your energy supplier. Your bank will ask for proof of this.

When it was decided to introduce deferred payment, the banks promised not to charge any fees. This is positive. But there are things you should think about for a while. During the deferment year, you continue to pay the interest agreed upon with your bank.

The term of your loan logically increases by one year. So you also pay interest for a longer year. And this can be a significant amount, especially if you are just starting to pay off your loan. Suppose that in the second month of the installment period, a twelve-month deferral of payment begins. Based on the simulation table in our example, you will pay 4,164.96 euros in interest during that period. Since you also have to pay interest on the extension of your loan, your loan is actually over €4164.96.

Our example of a home loan is based on a fixed interest rate. Even someone who has opted for a variable interest rate can see a lot of money lost through deferment. Especially if the current interest rates are now more favorable than those they were during your loan extension.

Do you have a variable interest rate? Read more about the risks and potential solutions here.

Based on our example, where the home loan was taken out recently, we do not need to take the home bonus into account. This has been rescinded since January 2020. But a person who has a home loan taken out before that date may be able to enjoy this tax benefit. But what happens to that bonus due to deferment that year? There is a possibility that due to the deferment you will not pay enough to get your loan to take full advantage during that year. Perhaps the housing bonus for those twelve months of deferment will be reduced. If so, you will pay more taxes for that year.

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