Who really owns my house?

Often you hear people say: “Anyway, until I have paid off my home loan it’s the bank who owns my house”. But is it true? Does the bank really own your house until you fully pay off the loan?

In Luxembourg, your house cannot be repossessed by a bank

The fact that a bank grants you a home loan based on the value of the house and with the house as a guarantee (a mortgage) does not give it any rights in terms of ownership. In Luxembourg (and most other European countries) banks cannot even repossess your house (unlike for example in the US), meaning banks cannot become owner of the property under the mortgage loan contract. 

Through the mortgage, the bank  is entitled to:

  1.  the repayment of all loans granted in relation with the mortgaged property in case you decide to sell the property, and
  2. the appointment of a bailiff to open a case for recovering the outstanding loan should you fail to honor the mortgage loan repayments and no other agreement can be found between you and the bank, the bank  for the repayment of your loan. In some cases this could lead to the public auctioning of your home by a notary public.

Your home is really yours 

The property really belongs to you.. The bank cannot:

  • enter your house without your permission,
  • cannot collect rent,
  • cannot decide who you allow to live inside the house,
  • cannot take possession of it or decide what color you paint it in!

Like with any other credit, you are obliged to repay the loan to the bank. If for some reason  you do not honor your home loan repayments the bank has the right to demand you to sell the house. This is normally the best solution for both parties as with the uncertainty around the final price at auctions (with the biggest risk being that the sales price would be below the remaining loan and you are left with the remaining debt), it is neither in your interest nor that of the bank to proceed with a public auction. With the proceeds of the sale you can repay all outstanding amounts of the loan(s) plus due interests to the bank and keep the remaining money.

Most cases revolving around breaches in terms of mortgage loan repayments in Luxembourg are settled between the bank and the owner, ending either with adjustments in the terms of the home loan contract, if the issue is temporary or, if necessary with a normal sale of the property by the owner on the open market.

Home sweet home 

So in short, you are the owner of your home, not the bank. Just repay your home loan on a regular basis and contact your bank in case your financial situation takes a turn for the worse and you foresee problems with paying your monthly instalments. Your bank wants you to be able to fulfill the terms of your loan as much as you do and you should consider your bank as a partner that helps you to buy your dream house!

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