For years, the Luxembourgish real estate market has been growing. With its expansion, the demand for mortgage loans rises as well. Increased buying behaviour also means higher demand for real estate loans. Whether it is to finance their own home or as an investment in building land or rental apartments, most buyers rely on a real estate loan.
To protect private buyers from excessive indebtedness, the CSSF (Commission de Surveillance du Secteur Financier) has set new standards to regulate the allocation of real estate loans.
Since 1st of January 2021, banks are subject to the following limitations on issuing real estate loans to individuals:
- The amount of a loan to finance a property may not exceed 80% of the value of the property that is to be bought. Here, reference is made to the value at the time of signing the loan. This means that potential buyers must contribute 20% of the value from their personal funds.
- Buyers of a property that will be used as a new main residence are subject to a 90% limit if it is not their first property purchase in Luxembourg.
- First-time buyers who want to finance their own home may be granted a loan that covers the entire value of the property that they want to buy.
Do you have further questions on this topic? Feel free to contact us, our agents are always happy to help.