Loan-to-value

What is loan-to-value?

Loan-to-value shapes both the rate you are offered and how much of your own money you need. After your income it is the biggest lever in your file.

Short answer

Loan-to-value is the ratio between the amount borrowed and the value of the property. Borrow €200,000 for a €250,000 home and your ratio is 80%. The lower it is, the smaller the bank's risk and the sharper your rate.

In brief

Calculation
Loan amount divided by the property value
Guidance, own home
Maximum 90%
Guidance, buy-to-let
Maximum 80%
Effect on the rate
Going from 90% to 80% is often worth a few tenths of a percent

What you should know

Why does the bank look at this?

The property is the security for your loan. If the bank ever has to sell, it wants the proceeds to cover the outstanding balance even if prices have fallen in the meantime. Your own contribution is that buffer. The larger it is, the less risk the bank carries, and that feeds straight into your rate.

What does the National Bank say?

The National Bank advises lenders to cap loan-to-value at 90% for an owner-occupied home and 80% for buy-to-let. It is guidance, not law: banks may write a limited share of their production above it, with more room for first-time buyers. So exceptions exist, but they are scarce and more expensive.

Can I borrow 100%?

In principle yes, but it has become rare and you pay a higher rate for it. It also does not solve your biggest problem: the purchase costs usually cannot be borrowed. Even with credit for 100% of the price you still need your own funds for registration duty and the notary.

How do I improve my ratio?

With a larger contribution, obviously, but also through the value the bank uses. Some lenders work from the valuation rather than the purchase price; buy below market value and your ratio falls on its own. A gift or a family loan generally counts as own funds, provided you document it properly.

Does the bank count the purchase costs?

No. Loan-to-value is calculated on the property value, not your total project cost. Registration duty and notary fees sit outside it and must be financed separately. Always add them on top of your own contribution when working out what you need.

Want to see which purchase price your own funds and income allow together?

Calculate your capacity

The figures quoted are recommendations from the National Bank of Belgium. Each lender applies its own policy and may deviate.

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