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Applying for a mortgage
Home buying

Applying for a mortgage

by Sarita Rao 7 min. 20.07.2022
Thinking of getting on the property ladder in Luxembourg? Then you'll need a mortgage. Here's how to get one and the types of mortgage available
You might be able to secure a lower deposit (normally 20-30% of the total property value) if you have assets that can act as a guarantee
You might be able to secure a lower deposit (normally 20-30% of the total property value) if you have assets that can act as a guarantee
Photo credit: Photo: Shutterstock

More than two thirds of residents in Luxembourg own their property. Fees for buying are limited and property tax is reasonable, but prices remain at eye-watering sums, around €14-17,000 per m² in some city locations. There are no restrictions on foreigners owning a property in Luxembourg.

If you plan to take a mortgage on a property, you’ll need a deposit of approximately 20-30% of the total value plus the notary, tax and bank fees. You might be able to secure a lower deposit if you can demonstrate you have other assets that can act as a guarantee (such as a property in another country).

US citizens/ passport holders might find it harder to get a mortgage. This is due to the Foreign Account Tax Compliance Act (FATCA), which requires that foreign financial institutions and certain other non-financial foreign entities report on the foreign assets held by their US account holders or be subject to withholding on payments.  

Essentially smaller banks may not be willing to set up a mortgage loan due to the additional paperwork required. US residents say they have had no problem opening bank accounts and getting mortgage loans with providers BCEE, BGL, ING and Societe Generale Luxembourg. 

Types of mortgage

You can choose a fixed-rate , a variable rate, an adjustable rate or a mixed fixed and variable mortgage. There is no minimum term so long as your income shows you can afford the monthly payments but the maximum term is usually 30 years, although it is possible to get a mortgage term for 40 years, depending on your age.

Variable-rate mortgage

The variable rate is set by the Central Bank of Luxembourg. Currently interests rates are low (1.36% for variable and 2.05% for fixed in May 2022), but your monthly mortgage payments will be subject to changing interest rates (which may go up). You should also consider how your income might change over the life of your mortgage.

Fixed-rate mortgage

Fixed rates are generally slightly higher than the current variable rate, but can be fixed for the entire term of you mortgage so you will know the exact monthly payments for the life of your mortgage.

You can find the latest figures for both rates here.

Adjustable-rate mortgage

Adjustable rates give you a fixed rate for a specified period of time such as three, five or ten years after which you must renegotiate a new fixed rate or move to a variable one.

Mixed fixed and variable mortgage

A final alternative is to divide your mortgage and take some on a fixed rate and some on a variable rate. If you have other assets which will vest during the lifetime of your mortgage then you can pay off the variable portion of the mortgage without penalty.

Note that your credit history and monthly balance sheet of incoming and outgoing money will affect the type of mortgage and amount you can borrow. As a rule of thumb, your mortgage should not be more than 35% of your net monthly income.

Mortgage calculator

A good way to check what your monthly payments will be is to use a mortgage calculator. Several banks and estate agents in Luxembourg provide these online:






AtHomeFinance (mortgage broker - not affiliated to a specific bank)

The application

You should organise a visit to see a loan officer at your bank, or ideally at a few banks to get a comparison of rates, terms, and the cost of life assurance. 

Mortgage calculators help you work out monthly payments
Mortgage calculators help you work out monthly payments
Photo: Shutterstock

The bank will calculate the full loan, the rate you have chosen and any additional fees including building work, renovation costs, notary, bank fees and taxes.

Bring with you:

  • ID or passport
  • Proof of your current income such as a 3 months of payslips
  • Proof of your outgoings and credit history including at least 3 bank statements
  • Sale agreement (or compromis de vente)
  • Land registry extract
  • Proof of funds including the deposit

The bank will require:

  • Mortgage protection in the form of life assurance for those named on the mortgage for cover in the event of death of one or both parties. You may require a medical test before you are given an assurance premium.
  • Wage assignment to enable the bank to take monthly mortgage payments directly from your employer should you default on payment.
  • Insurance to cover your home in the event of fire or other unforeseen damage.
  • If you are building or renovating a house you may be required to give details of planning permission, building plans and quotes for work.

On the day you are required to complete proceedings with the notary, you will be asked first to visit the bank to sign all the relevant documents. You will be given a guarantee from the bank to take to the notary.

From this time onwards, you will begin repayment of your loan, but if you are not due to move in for a few weeks or months, the bank may allow you to delay loan repayment and just cover the cost of interest for up to 12 months. This will be useful if you have to continue renting a property whilst your home is being renovated.

You can sometimes get more competitive rates from mortgage brokers, who have access to smaller, niche providers, but can also broker competitive rates with traditional banks.

Why buy?

If that is enough to put you off buying a property, there are quite some incentives to doing it. Firstly the government gives you a tax gift of €20,000 per person (referred to as the Bellegen Akt) to offset against registration and transcription fees (which are around 7%). You must live in the house for two years after purchase.

Secondly, notary fees are fixed and property tax is low in Luxembourg compared to other European countries, plus you can claim mortgage interest payments as tax deductible on your income tax returns.

Government aid 

If you can't secure a mortgage due to your income, you may qualify for a state guarantee. You can find out more here

One of the Covid-19 measures introduced was an interest subsidy or aid from the State for property owners repaying a mortgage loan up to €175,000 (including loans for construction or home improvement). The susidy is based on income levels, up to an income of €7,000 per month. You can find out more on Guichet here.

More information

You can read our guide to property buying here which takes you step by step from making an offer to moving in, and our article on affordable, subsidised and social housing here

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