Family Loan: Helping Children Become Homeowners

If your child wants to buy their first home but doesn’t have enough capital for the bank, a family loan could be a solution. Increasingly, young families are turning to this option to help them buy their first home, especially in a real estate market where prices are high. In this article, we explain how a family loan works and what the benefits are for both parents and children.

What is a Family Loan?

A family loan is a loan granted by parents to their children to help them purchase their first home. This is a solution often welcomed by children who lack the necessary funds to buy real estate. In today’s real estate market, where prices are high and banks impose strict criteria for mortgages, the family loan is a very useful financial support option.

The Growing Need for Family Support

More and more young people are struggling to buy their first home. Due to rising real estate prices, it’s almost impossible for many first-time buyers to find a house or even an apartment within their budget. Even for a couple with two salaries, external help is often required to make a purchase. In this case, it is usually the parents who are asked to step in.

Alternatives to the Family Loan

In addition to the family loan, there are other ways parents can help their children buy a home. For example, parents can give a financial gift (often considered an advance on the inheritance), donate real estate, or even act as guarantors for the mortgage. However, the family loan often provides the most flexibility and carries fewer risks for both parties.

Advantages of the Family Loan

The family loan offers many advantages for both parents and children. For parents who wish to help their children without dipping into their savings, the family loan is an ideal solution. Additionally, it is also possible to mortgage the parents' property, which can make the loan easier to obtain. This provides added security for the bank, which might otherwise be hesitant to grant the loan.

In some cases, banks may even offer a loan to cover the notary fees, providing additional financial support to children who have a limited budget. This loan, which can range from €10,000 to €50,000, has been available since 2020 in several banks and is a valuable aid to complement a family loan.

The Role of the National Bank and Strict Mortgage Rules

Since 2020, the National Bank of Belgium has introduced stricter rules regarding mortgage loans. Banks can no longer offer mortgage loans covering more than 90% of the property value. This has made it even more difficult for many young people to buy a house without external support. Therefore, it is essential that parents are ready to support their children, either through a family loan or other forms of assistance.

Considerations When Offering a Family Loan

Offering a family loan is an important decision, and it is essential to carefully consider several factors. These factors include the interest rate, the loan duration, and the repayment terms. In some cases, parents may even mortgage their property as collateral, which provides additional security for the bank.

Conclusion: The Family Loan, An Essential Solution

The family loan is a valuable solution for young families who wish to buy their first home but don’t have enough equity to do so without outside help. In a context of rising real estate prices and stricter mortgage rules, the role of parents as financial supporters becomes more important than ever. Whether it's for financing the home purchase or covering notary fees, the family loan enables children to achieve their homeownership dreams while offering parents a flexible and responsible way to support them.