With property prices rising, interest rates trebling and banks becoming increasingly demanding, getting a mortgage has become a real challenge. Using a broker could make the task easier, especially as this service is often free and highly efficient.
Obtaining a mortgage in Luxembourg has become increasingly complicated since the crises linked to COVID and the war in Ukraine. At a time when house prices are rising steadily and the cost of financing has tripled, banks are now demanding stronger guarantees and larger personal deposits. Loans are frequently refused. Against this backdrop, the use of mortgage brokers is growing rapidly, and more than 10% of Luxembourgers have already used their services. Here's why you should consider doing the same.
Optimise your chances of obtaining a loan
Many would-be homeowners overestimate their purchasing capacity, as the property market has changed rapidly. A household that could borrow a million euros two years ago can now expect to borrow no more than 700,000 euros. A broker can help you avoid being turned down by the banks by accurately assessing your purchasing capacity, taking into account your income, job stability, savings and financial profile. This will enable you to target your search and save time.
Negotiating with banks can be complex. A credit broker, thanks to his solid relationships with the banks and their decision-makers, will be better able to defend your case. He or she will highlight your strengths in relation to the specific criteria of each lender, thereby increasing your chances of success.
Significant savings on your loan
Brokers' services are generally free for borrowers, as they are remunerated by the lending bank. However, their expertise in negotiation often enables them to obtain the best terms and interest rates. By optimising the structure of your loan (fixed rate, variable rate, home loan), a broker can considerably reduce the total cost of your loan.
To find out more about changes in interest rates, click here.
Save time and simplify the process
By using a broker, you can avoid having to deal with a large number of banks. After a single meeting, the broker will be able to propose several offers tailored to your profile, helping you to make comparisons quickly. What's more, he or she will manage your entire application, seeing you through to the final signature.
A clear vision in a complex market
Each bank has its own requirements and particularities: some offer loans for up to 40 years, while others only offer one type of rate. In a credit market as complex as Luxembourg's, it's difficult for non-specialists to find their way around, which can lead them to choose a loan that isn't suited to their life plans, with all the financial risks that entails. That's why more and more Luxembourgers are turning to brokers: they can quickly provide them with a clear overview of all the options available, in a highly complex and risky environment where you have to juggle a wide range of concepts and possible scenarios: variable rate, building society savings, associated costs, early repayment, partial repayment, early resale, tax, penalties... to make the best choice on the best terms.
Maximise your tax benefits
In Luxembourg, insurance costs, mortgage interest and contributions to a home savings scheme are tax deductible for a principal residence. However, there are different formulas. Understanding these mechanisms is a key skill for brokers, who can help you make significant savings. For example, thanks to the single premium mechanism, it is possible to reduce the amount of the loan insurance premium on your tax bill by up to 40%.
Renegotiating an existing loan
Few borrowers think about it, but a broker can also help you renegotiate an existing loan to adapt it to your new needs. Whether you want to switch to a fixed rate, extend or shorten the repayment period, or even have your loan taken over by another bank, a broker will offer you suitable solutions free of charge.
If you are planning to buy a property or refinance your mortgage, don't hesitate to contact a Credihome broker, who will be able to advise you.
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