Contrary to popular belief, buying without a down payment is possible in Luxembourg. However, to qualify for this total financing, you must meet certain conditions and provide guarantees. We'll tell you what they are!

Funding at 110 %

If you do not have any personal contribution to finance a flat or a house, then you must take out what is known as a 110 % loan. This type of loan allows you to finance the entire property and the associated costs (registration fees, deeds, administrative costs, etc.).

The absence of a personal contribution is therefore not necessarily an obstacle to becoming a homeowner, as some banks will grant 110% financing if they obtain guarantees.

The conditions to be met to buy without a deposit 

To be able to borrow without a down payment, the buyer must follow the same rules as for traditional financing with a down payment. In particular, they must have a stable job and be in a healthy financial situation.
The debt ratio (the 33% rule) and the concept of the "reste à vivre" are also to be considered and do not change for a total financing. However, the borrower will have to present a guarantee.

Guarantees to be provided to buy with no deposit 

To finance a property project without a deposit, there are two distinct solutions:

• The first option is to use the mortgage line on another personal or family property. The bank will then check the value of the property and register a mortgage guarantee to make up for the lack of contribution.
• The second solution is the use of a state guarantee. By saving about €300 per year without withdrawing any money from the account for three years (note that the three years start when the account is in credit by €240), the state can act as guarantor up to €130,000, which will substitute for the contribution.

Solutions for building up a personal contribution 

However, to finance a property, a down payment is preferable in order to give yourself the best chance of realising your property project.

The easiest way to build up this contribution is to make an effort to save. For example, monthly savings of €600 in a dedicated account will generate savings of €7200 in one year. In the case of a first purchase, these savings will make it possible to cover a significant part of the ancillary costs.

Contact an expert atHomeFinance to find your home loan.