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Mortgage loans
Mortgage loans in Luxembourg: how they work, what they cost and what to consider before you borrow.
A mortgage loan allows you to finance the purchase, construction or renovation of a property.
Before committing, it is important to understand how it works, how much it costs, and what your rights and obligations are.
Key takeaways
- A mortgage loan is used to finance a property purchase or project
- You must repay the loan amount and interest
- The property is usually used as collateral (mortgage)
- You receive standardised information to compare offers (ESIS)
- You benefit from a 14-day reflection period before accepting an offer
What is a mortgage loan?
A mortgage loan is a credit granted by a bank to finance:
- the purchase of a home
- the construction or renovation of a property
- the acquisition of land for building
In return, you must repay:
- the borrowed amount (capital)
- the interest
What does a mortgage loan cost?
You can repay your mortgage loan partially or in full before the end of the contract.
- You must inform the bank in writing
- Early repayment fees may apply, especially for fixed-rate loans
Guarantee (mortgage)
In most cases, the bank requires a guarantee in the form of a mortgage on the property.
If the loan is not repaid, the bank may initiate a sale of the property to recover the funds.
Before signing: what happens and what the bank must check
Before concluding a mortgage credit agreement, the bank must provide you with clear information and assess your creditworthiness.
What information must you receive?
- Duration of the loan
- Total cost of the credit
- Interest rate
- Repayment conditions
- Conditions for early repayment
- Consequences of non-payment
These are called pre-contractual information.
How does the bank assess your situation?
The bank evaluates whether you are able to repay the loan based on:
- Your income (salary, pensions, etc.)
- Your expenses (rent, bills, existing loans)
- Your assets (savings, property)
- Your debts
This assessment is required by law and ensures that the credit is adapted to your financial situation.
Compare offers: the ESIS document
Before signing, you receive a European Standardised Information Sheet (ESIS).
This document:
- summarises the key features of the loan
- uses the same format in all banks
- allows you to compare offers easily
Interest rates: fixed or variable
Mortgage loans can be based on two types of interest rates.
- Fixed interest rate:
- The rate remains unchanged for a defined period
- Your repayments remain stable during that period
- Provides predictability and security
- Variable interest rate:
- The rate can increase or decrease over time
- Your repayments may change
- Depends on market conditions
Can you repay your loan early?
You can repay your mortgage loan partially or in full before the end of the contract.
- You must inform the bank in writing
- Early repayment fees may apply, especially for fixed-rate loans
How is the loan repaid?
The repayment conditions are defined in your credit agreement.
You may:
- repay the loan through regular instalments (most common)
- repay the full amount at the end of the contract (less common)
What happens if you do not repay the loan?
The repayment conditions are defined in your credit agreement.
You may:
- repay the loan through regular instalments (most common)
- repay the full amount at the end of the contract (less common)
Your reflection period
After receiving a mortgage offer, you have a 14-day reflection period.
During this period:
- You can review and compare offers
- The bank cannot change the conditions
Key terms explained
Mortgage
A guarantee taken by the bank on a property.
ESIS
A standardised document used to compare mortgage offers.
APR (TAEG)
The total yearly cost of the loan.
Residual debt insurance
Insurance that may repay the loan in case of death or illness.
More information
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FR
Fiche d’information simplifiée – Crédit immobilier (FR)
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DE
Vereinfachtes Merkblatt – Immobilienkredit (DE)
