Mortgage for a property abroad from Belgium: your options

An apartment on the Spanish coast, a house in France, or a place back in your home country: many people living in Belgium buy property abroad. Financing it usually works differently from a Belgian home. Belgian banks rarely grant a mortgage secured on a property outside Belgium. There are workable routes, though. This article explains them, along with what you then need to declare in Belgium.

Why a Belgian bank rarely accepts a foreign property as security

With a normal home loan, the bank takes a mortgage on the property you buy. If you stop repaying, it can have that property sold. Abroad, that is harder:

• the mortgage has to be registered under that country's law, with the local authorities;
• a forced sale goes through foreign procedures and courts;
• the bank knows less about the local market and the value of the property;
• outside the eurozone, there is currency risk on top.

That is why most Belgian banks do not offer this, or only in exceptional cases. Ask your own bank, but don't count on it.

Option 1: borrow against your Belgian home

The most common route is a loan from a Belgian bank with your home in Belgium as security. If you have paid off much of your current mortgage, or your home has risen in value, there may be room to borrow again.

The advantages are listed below.

• you deal with a bank you know, in euros and under Belgian law;
• terms are usually better than those of a foreign bank that treats you as a non-resident;
• you can buy abroad like a cash buyer, which helps in negotiations.

Disadvantages:

• your Belgian home is at risk if you cannot repay;
• a new mortgage registration, or a change to the existing one, comes with costs;
• don't assume you will get a tax benefit on this loan.

How to use the equity in your home is covered in how home equity works in Belgium. The options for an extra loan on your house are in a second mortgage on your home.

Option 2: a mortgage from a bank in that country

In many countries, local banks lend to non-residents. Keep the following in mind:

• Lower loan-to-value. Non-residents often have to put in a larger share of the price themselves than with a Belgian home loan.
• Your income is assessed differently. The bank will want your Belgian payslips, tax assessments and bank statements, sometimes translated.
• Local formalities. For example a tax identification number, such as the NIE in Spain, and a local bank account.
• Local costs. Transfer taxes, notary, registration and bank fees follow that country's rules.
• Exchange rates. If you earn in euros but borrow in another currency, your monthly repayment in euros can go up.

Work with an independent local notary or lawyer, and check that any local mortgage broker is licensed. The difference between a bank and a broker is explained in mortgage broker or bank.

Option 3: own funds, or sell your Belgian home first

People who plan to move abroad, for example when they retire or return home, often sell their Belgian property. With the proceeds, they can buy abroad largely or entirely without a loan.

The order of events is then the main decision:

• Selling first gives certainty about your budget, but you may need to rent for a while.
• Buying first requires bridging finance until your Belgian home is sold. You carry double costs for a time.

A realistic sale price is essential here. If you count on proceeds the market won't pay, your whole plan falls apart. So get a free valuation of your home before you commit abroad.

What you need to declare in Belgium

A foreign property does not stay invisible to the Belgian tax authorities. If you are a Belgian tax resident:

• You declare the property in your personal income tax return. Since income year 2021, the Federal Public Service Finance also sets a cadastral income for property abroad, just as for a Belgian home. More on that concept in how cadastral income is calculated.
• The income is often exempt, but it still counts. Belgium has double taxation treaties with many countries. The income from your foreign property is then exempt in Belgium, but it is taken into account to set the tax rate on your other income.
• The other country taxes too. Think of local property tax or non-resident income tax. These rules vary widely between countries.

Have your situation checked by a tax adviser who knows both countries, especially if you plan to rent the property out.

Step-by-step plan

1. Set your total budget, including the costs abroad and a buffer.
2. Have your Belgian home valued, so you know how much equity or sale proceeds are available.
3. Ask your Belgian bank about a loan secured on your home in Belgium.
4. Compare that with an offer from a local bank in the country where you are buying.
5. Have the purchase handled locally by an independent notary or lawyer.
6. Sort out your Belgian tax return and the local taxes.

Selling your home in Belgium to buy abroad?

Then your whole plan depends on a smooth sale at the right price. Compare estate agents in your area and choose one who takes your timing abroad into account. You get at most three verified agencies, so six agents won't be calling you.

Want to estimate your selling costs first? Read what you pay as a seller, then find the agent that suits you.