The adventure begins: you know where you want to live and what type of property you're looking for in Luxembourg. Now you know exactly how much you can borrow.

How does a home loan work in Luxembourg?

Here's a simple definition: a property loan is a loan granted by a bank to finance the purchase of a property (flat, house, land). The loan is taken out for a pre-determined period (15, 20, 25 years or more) at a rate that may be fixed, variable or variable.

• The rate determines the interest you pay to the bank each month in return for the loan: the higher the rate, the more you will pay for your loan. These rates vary according to the economic climate and your creditworthiness (your theoretical ability to repay the loan). The less creditworthy you are, the more expensive your loan will be compared with other profiles.
• You usually have to make a financial contribution: To finance your project, the bank will ask you to invest your savings. This contribution corresponds to 10% of the total amount of the loan if you are buying your main residence. It rises to 20% if you are buying to invest (i.e. to rent the property). On the other hand, if you are a first-time buyer, you could be financed at 100% thanks to state guarantees. We recommend that you consult a broker to find out your rights.
• You can also subscribe to outstanding balance insurance for your loan, which protects you in the event of the premature death of one of the borrowers (if one of you can no longer repay the loan). In Luxembourg, it is optional, but more and more banks are asking for it. It is also possible to add options to extend these guarantees and cover the risks of invalidity or accidents.

Now, here are the specifics of a home loan in Luxembourg:

• The duration of the loan can be up to 30, 35... or even 40 years in some cases! This term is longer than in the rest of Europe, due to the high property prices here. By way of comparison, in France, the maximum term is 30 years (and it is rare to get a loan for such a term, as most banks limit it to 25 years);
• Outstanding balance" insurance"can cost several hundred euros a month. The charges are a percentage of the amount of your loan: because of the high property prices, the contributions will be mechanically higher than in other countries. 

Beware of Luxembourg if you are on a fixed-term contract, temporary or trial period: your situation could complicate the financing of your project. Not all banks accept such profiles. The best way is to talk to an atHomeFinance expert to find out what is possible to finance your project, and under what conditions.

How much can you really borrow to finance the purchase of your property?

Even if you have already started your real estate visits to take the pulse of the market, you should know the exact amount you could finance before you decide to buy a property. This will avoid disappointment and setbacks. Because unlike other countries, in Luxembourg, "a provisional sale agreement is equivalent to a sale". (according to the formula of the Civil Code): once the property purchase is committed and the compromise signed, you can only retract under certain specific conditions (such as a certain number of bank refusals).

So prepare your project well and be sure you can finance it before you sign anything.

Here's how to determine the real costs of your acquisition:

• The price of the property : This is the easiest to determine, as it is in the advertisement! But of course you can also negotiate it;
• Notary and registration feesThese costs are to be paid by you when you sign the deed of sale. These costs correspond respectively to 1% and 7% of the price of the property. They vary according to the characteristics of the property: old or new;
• The work, if necessary, that needs to be budgeted for before making your loan
• The contribution required according to your profile 0% to 10% if you are buying your main residence for the 1st time, 10% if you are buying a main residence for the 2nd time^e times (or more), 20% if you invest and want to rent out

The costs of the mortgage 

It is no secret that when we borrow from the bank, whatever the project, we pay interests. But in addition to interest, you have to think about mortgage fees. A mortgage on the property being acquired is required by the bank. This is a a guarantee for her in case of inability to repay the loan. The notary is responsible for registering it with the Mortgage Office.

Please note that the bank's file fees, mortgage fees and outstanding balance insurance are deductible from your tax return.

The best way to find out your final financing package is to carry out a free simulation with an atHomeFinance expert: you can request one by filling in the form at this link.