How to estimate your overall cost of buying a property?

You have found the apartment or the house of your dreams? Perfect! But are you sure that you have tallied up all the costs involved in buying a property? Beyond the purchase price fixed by a preliminary sale agreement or a contract between the seller and yourself, a lot of additional costs must be taken into account in your budget.

Notary fees 

The notary fees consist of the three following elements: the fees of the notary and his staff; the reimbursement of expenses for services and external documents required for buying a home (public register of lands, land-surveyor, etc.) and the registration and transcription fees collected on behalf of the Administration of Registration and Domains.

In Luxembourg, the registration and transcription fees cost 7% of the purchase price but, in case of the acquisition of a personal residence, a reduction is granted in the form of a tax credit that can amount to a maximum of EUR 20,000 (EUR 40,000 in case of a property purchase by two persons, e.g. a couple). The tax credit is applied immediately at the signing of the act of sale. Be careful! If you rent all or any part of your home or if you don’t live permanently in your home for at least 2 years, you have to pay back the entire tax credit. Contact your notary for more information!

Mortgage fees 

Mortgage registration fees are charged for the notarised instrument granting the mortgage and registering it on behalf of the bank at the Bureau of Mortgages. You pay these fees through your notary. This mortgage is a guarantee required by the bank. It allows the bank to sell the property if the debtor can’t meet his or her obligations. This extreme solution is obviously used when there is no alternative and only after the bank has sought other solutions with the client. 

Administration fees

When your home loan is approved, the bank charges administration fees. The amount of the fees can vary from one bank to another but they are generally not very high.

Insurance fees and charges 

Very often, with your home loan, you have to take out a fire insurance to protect your home. Your bank will also recommend – but without any obligation - that you take out a debt balance insurance. This form of accidental death insurance covers the outstanding balance of the loan in the event of your death. If you die suddenly, your loan will be repaid in full and you will save your family from having any problems.

Interim interest payment 

Renovation and building works are necessary and you don’t want to repay your loan immediately?

In this case, take into account the interim interest payment calculated on the basis of the amount borrowed (or actually used in case of a new building) before repayments begin. 

Auxiliary expenses

Don’t forget the auxiliary expenses such as gas, telephone, Internet or a collective TV aerial. And if you buy an apartment, you will have to pay condominium fees which cover the maintenance costs of all equipment and services (lighting, elevator, etc.)

Unexpected expenses

In case of a renovation or a new building, set aside funds for unexpected expenses and the likely increase in the prices of materials during the works.

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