Does a second loan have consequences for my first home loan?
For a loan for a second home, you can safely move to another bank, even if your first one has not yet been paid off. Your only risk is the loss of a part of the tax benefit of your first loan, but you also suffered that loss from your ‘own’ bank.
What is mortgage?
A mortgage means that you give a bank the right to sell a property if you no longer meet your obligations. The bank can then use the proceeds to repay an outstanding loan.
A mortgage is linked to a specific property. It does not matter whether you took out the loan for that property or for someone else. So you can borrow perfectly for a house and have the mortgage settled (register) on another property as a guarantee.
You can even have multiple mortgages settled on the same property. The bank that comes first has a first-rank mortgage, the bank that follows a second-rank mortgage, the bank that comes third, and so on.
In the event of a forced execution, the first bank will be paid in full first, then the second bank, then the third. This means that the guarantee for the first bank is stronger than that for the second and third bank.
If you already have a mortgage loan and you want to finance the purchase of a second property with such a loan, you have the choice. You can have a first-rate mortgage on the new property or a second-grade mortgage on your first home. In the latter case, your bank will certainly check whether it is worth enough to carry two mortgages. In addition, she may consider charging a higher rate, for example 0.25% or 0.50% more because she is at a higher risk.
You can take the loan from the same bank or from another bank. In both cases the same consideration is made: do you have enough income to pay off the credits and can you provide sufficient guarantees in case things go wrong?
Tax benefit first home
Things are different only in tax terms. In Flanders, you are entitled to the housing bonus of 1,520 USD for the house that you live in yourself. During the first ten years of the loan, 760 USD will be added if it is your only home. And if you have at least three children, another 80 USD. That brings the maximum to 2,360 USD per person.
The housing bonus ultimately entitles you to a tax reduction of 40%. Whoever fills his basket to the maximum, saves 944 USD per person.
Tax benefit second home
For a second home that you are not going to inhabit yourself, you are not entitled to the housing bonus, but to a less generous federal tax reduction. This amounts to 30% and is calculated at 169.20 USD + 6% of your net taxable professional income, with a global maximum of 2,310 USD. In the best case, you therefore have to pay 693 USD less taxes.
Please note: the maximum of USD 2,310 includes both the capital repayments of the loan and the premiums for the outstanding balance insurance and the premiums that you paid for long-term savings through a life insurance policy. Interest may then be deducted from the real estate income of your second home.