Buying your first home is exciting and undoubtedly expensive. In Luxembourg, the property market is competitive, the rules are strict, and the financial side can get complicated fast. So, figuring out where to start and what to expect is a little bit complicated.
But don’t get worried! We are here to help you through the entire process, from setting a budget to finding the right home loan and signing the final papers.
Before you start scrolling through listings or falling in love with a place, there are a few things you’ll need to sort out first. Can you afford it? How much will the bank lend you? What kind of mortgage makes sense? And what about all those extra costs? And more.
Let’s take it one step at a time.
Let’s Dive in
Step 1: Get Clear on Your Plans and Your Budget
Before you go ahead and start looking to buy a home, you must have a basic idea about your financial stability. Not just what you’d like to spend, but what makes sense based on your income, current expenses, and the kind of mortgage a bank would actually approve for you.
Firstly, you must know what your goal is. Like, are you buying a place to live in long-term, or is this more of an investment? Do you want to be close to work in the city, or something quieter outside the centre? These decisions will shape your budget just as much as the numbers will.
Then take a look at your income. In Luxembourg, banks usually prefer applicants with stable contracts, CDI contracts in particular. If you are self-employed or your income changes from month to month, most banks will ask for an average over the past year.
Now, consider any existing loans or monthly payments you are already making, like car loans, credit cards, student loans, and everyday expenses. Because all these will affect what you can borrow. On top of that, things like groceries, insurance, childcare, subscriptions and if you are still paying rent, should be part of your calculations too.
Banks will look at what is your debt-to-income ratio, which is basically how much of your income is already committed to other debts. They’ll also check whether you still have enough left over each month after paying your mortgage to cover your regular costs.
This part of the home ownership process can feel dry, but it’s something essential. If you are unsure about anything here, it’s worth sitting down with someone who can walk through the numbers with you, whether it’s a financial advisor or your mortgage contact at the bank.
Not sure what you could afford? Calculate your home loan now.
Step 2: Build a Budget for Your First Home
A proper budget includes everything from legal fees to moving expenses, and it’s easy to miss a few if you are very fresh to the process.
Start with the purchase price of the home. That’s likely your biggest expense, but it’s far from the only one. Once you have agreed on a price, you’ll also need to pay for notary fees, stamp duties, and registration costs.
These are standard with any property purchase here and typically come out to around 7% to 10% of the sale price. The exact amount depends on the property and whether you qualify for any government support.
Next, look at the costs linked to your mortgage. Most banks will charge you to set up the loan. Some charge extra for early repayment, document handling, or even just for maintaining the account. Then there’s credit protection insurance, which covers your repayments if something serious happens to you. It’s often recommended, and in some cases required, so it’s best to include it in your budget from the start.
And don’t forget about everything that happens after the paperwork is signed. You’ll need to plan for moving expenses. This might be simple. If the home isn’t fully equipped, you’ll need to buy appliances, and maybe even furniture. And if any repairs or renovations are needed, those costs can add up quickly.
Taking the time to build a full and honest budget will help you avoid surprises. The more prepared you are, the smoother everything else tends to go.
Want to see what you could afford? Try our online mortgage loan calculator.
Step 3: Explore and Compare Mortgage Options
Once you have got your budget in place, it’s time to figure out how you are going to pay for your home. Most first-time buyers will be looking at mortgage options in Luxembourg, including fixed rate, variable rate, and even blended structures.
For now, the key thing is to compare your options carefully. Of course, the interest rate matters, but it’s only part of the picture. Always ask for a European Standardised Information Sheet (ESIS) when speaking to a bank. It lays out all the important details in a way that makes it easier to compare different offers side by side.
Look beyond the headline rate. Some banks add on setup charges, account maintenance fees, or penalties if you want to repay early. Others might offer a lower monthly repayment at the start, but stretch the loan out in a way that costs more overall.
You don’t have to become an expert overnight, but take the time to read the print. Ask questions. And if something feels unclear, bring it up with the bank or your advisor.
Step 4: Explore Government Incentives and Tax Credits
If you are buying your first home in Luxembourg, it’s worth checking out the incentives offered by the government. They won’t cover the entire cost of your property purchase, but they will be able to make a significant contribution, especially when you’re dealing with high property prices and upfront expenses.
The most common is the Bëllegen Akt, which offers a tax credit of up to €40,000 per buyer to reduce registration fees due when buying your main residence. Couples can benefit from double that amount if they qualify. Incentives for energy-efficient homes often depend on the property’s energy rating or approved renovation work.
These benefits are not automatic. They depend on factors like the type of property, your income, and what the home will be used for. The rules can also change, so it’s important to check what applies when you’re getting ready to buy.
At Smart Finance, we assist you in planning these incentives into your financing plan upfront. That way, you’re aware of what assistance you can qualify for, and how it fits into the overall scheme of your budget.
Step 5: Get Pre-Approved and Start House Hunting
In Luxembourg, homes can sell double quick. Before you start viewing properties, it’s smart to get pre-approved for a mortgage. It gives you a clear idea of what you can afford and makes your offer more convincing to sellers.
Pre-approval shows that your financing is already in motion. Sellers tend to take those buyers more seriously, which can give you a slight edge, especially if multiple people are interested in the same property.
Once you have got that sorted, you can start your search. Most people begin with different online sites. They are easy to use and give you a sense of what is out there. You can also go through an agent or buy directly from a private seller.
Before diving in, set some priorities for what you want, such as an apartment or a house, the city centre or the suburbs, a new build or something older, so you don’t waste time looking at homes that don’t fit.
Having your numbers in place makes the rest of the process a lot smoother. It keeps you focused and ready to act when the right place shows up.
Step 6: Make an Offer and Sign the Preliminary Agreement
When you have decided on a property that feels right for you, it is time to make an offer. You can do this through a real estate agent or directly with the seller, depending on how the property is listed.
Before you move forward, make sure you have done your homework properly. Take a moment to look at how long the home has been on the market, what similar properties are selling for, and make sure what is included in the price. That will give you a sense of whether there is room to negotiate or if it makes more sense to go in close to the asking price.
Once your offer is accepted, the very next step is signing the compromis de vente, the preliminary sales agreement used in Luxembourg. This contract is legally binding as long as the agreed conditions are met, including final mortgage approval. It sets out the agreed price, any conditions, and key deadlines for the rest of the process.
You’ll also need to pay a deposit, usually it is around 10% of the purchase price. That money is held in escrow and later applied to your final payment at closing.
Before you sign anything, make sure you understand what you are agreeing to, that is very important. If something is not clear, ask your notary or financial advisor to go over it with you. It’s a big step, and it’s worth getting right.
Step 7: Finalize Your Mortgage and Legal Paperwork
With the compromis de vente agreement signed and your offer accepted, you are now in the final stretch. This is where your mortgage and legal documents come together.
First, your bank will review everything again before finalising your mortgage approval. They will double-check the loan terms, property details, and any last documents before confirming the agreement.
Next, you will have to select a notary, which is mandatory when buying any property in Luxembourg. The notary will take care of the legal side of things, checking the property records, preparing the final contract, and ensuring that everything is ready to close the sale.
Once the paperwork is done, you’ll meet at the notary’s office to sign the final deed of sale. This is when the property officially and truly becomes yours. After the signing, the notary will register your ownership with the Luxembourg Land Registry.
This step can feel formal, but as long as your financing is sorted and your paperwork’s in order, it usually runs smoothly. If anything feels unclear, don’t hesitate to ask your notary or financial advisor to walk you through it.
How Smart Finance Helps You Buy Your First Home
Buying your first home comes with a lot of moving parts. If you’re purchasing across borders or simply trying to figure out how financing works between Luxembourg and its neighbouring countries, it’s easy to feel stuck or unsure of what to do next.
That’s where we can help you.
At Smart Finance, we deal with the people living in Luxembourg who wish to buy property here or just across the border in Germany or France. We guide you through the process, from calculating what you can afford to choosing the right type of loan and understanding the legal and tax details that come with buying abroad.
We’re not here to sell you a generic mortgage. We consider your entire financial situation and craft the proper solution, one that suits your life, not a formula.
If you’re planning to buy your first home and want to talk through your options, get in touch. We’ll help you take the next step with more clarity and less guesswork.
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