Have you found an apartment listed at €500,000, €700,000 or €900,000? The price shown in the property listing does not necessarily represent the total budget you will need to become a homeowner.
When buying a property in Luxembourg, several expenses may need to be added to the purchase price, including acquisition costs, financing costs, insurance, potential renovation work and other expenses associated with moving into your new home.
Before you even start viewing properties, it is therefore important to determine not only how much you can borrow, but also how much your property project will actually cost overall.
The purchase price is only part of your budget
This is one of the most common mistakes made by first-time buyers.
A buyer with a budget of €600,000 should not necessarily focus only on properties listed at up to €600,000.
You need to leave enough room in your budget for the various costs associated with the purchase and determine which expenses may potentially be included in your mortgage financing.
Your overall budget should therefore take into account:
purchase price + acquisition costs + financing costs + potential renovation work + additional expenses.
What are the main costs to consider?
Property acquisition costs
Buying a property involves various administrative and tax-related costs.
The amount actually payable by the buyer depends on several factors, including the type of purchase, the buyer’s personal circumstances and any schemes or benefits for which they may be eligible.
This is where the Bëllegen Akt can play an important role for certain buyers purchasing a property as their main residence.
It is therefore better to include these expenses in your budget from the beginning rather than discovering them after signing the preliminary sales agreement.
Your down payment
Your down payment is another key part of your property financing.
Banks may consider several factors, including your available savings, the purchase price, the amount you wish to borrow, your borrower profile and the nature of your property project.
Two people looking to buy properties at the same price may therefore receive different financing conditions.
Having savings available can also give you greater flexibility to cover expenses that may not be included in the mortgage.
Mortgage-related costs
The financing itself may also involve additional costs.
Depending on the bank and the financing structure, you may need to budget for certain expenses associated with processing the application, guarantees or other steps required to arrange the mortgage.
This is why two mortgage offers should not be compared solely on the basis of the advertised interest rate.
The overall cost of financing should also be considered.
Mortgage insurance
Depending on your financing and personal circumstances, different types of insurance may also form part of your property project.
Their cost can vary according to several factors, including the amount borrowed, the mortgage term and the borrowers’ profiles.
These expenses should therefore also be anticipated when calculating your overall budget.
Don’t forget renovation costs
A less expensive apartment can sometimes require a larger overall budget than a more expensive property that is ready to move into.
A new kitchen, bathroom, electrical work, painting, flooring, insulation or other renovations can quickly represent a significant expense.
Before making an offer, try to estimate the work that may be required.
You can then determine whether these costs could potentially be included in your financing plan or whether they will need to be paid from your savings.
What about expenses after the purchase?
Your budget does not end on the day you sign the purchase deed.
As a new homeowner, you should also anticipate other expenses such as moving costs, furniture, equipment, condominium charges, property maintenance and potential future renovations.
The aim is therefore not necessarily to use all your savings to complete the purchase.
Keeping an emergency savings reserve after buying the property can be particularly useful.
Example: you want to buy an apartment for €600,000
Imagine you have found an apartment listed at €600,000.
Your first question should not simply be:
“Can the bank lend me €600,000?”
Instead, you should ask:
“What is the total cost of my project, and how much money do I need to finance it under suitable conditions?”
You should consider:
- your available down payment;
- acquisition-related costs;
- any benefits or reductions you may be eligible for;
- financing costs;
- potential renovation work;
- the savings you would like to keep after the purchase.
Only after analysing these different elements will you have a realistic picture of your actual property budget.
How much savings should you keep after buying?
It can be tempting to use all your savings to increase your down payment.
However, this is not always the best strategy.
Becoming a homeowner involves new expenses, and unexpected costs can arise at any time.
It may therefore be wise to keep a financial reserve after completing the purchase rather than using almost all of your available savings.
The appropriate amount will naturally depend on your personal circumstances, income, the property you are buying and your expected expenses.
Work out your budget before you start viewing properties
Defining your property budget in advance offers a major advantage: you immediately know which properties realistically match your financial situation.
This helps you avoid viewing properties that you are unlikely to be able to finance. It can also prevent you from underestimating your actual purchasing power.
You can start by using the Prêt Immo mortgage simulator to obtain an initial estimate of your financing.
A more detailed assessment can then take into account your down payment, income, existing loans, preferred mortgage term and the specific characteristics of your project.
Prêt Immo helps you calculate the real budget for your property project
A property purchase involves more than the price displayed in a property listing.
Before making a commitment, it is important to determine how much you can borrow, how much savings you may need and the overall cost of your purchase.
Prêt Immo can assist you with this analysis and help you prepare your financing application with the banks.
Have you found an apartment or house in Luxembourg? Book an appointment with a Prêt Immo adviser to review your project and determine your financing budget.
