Am I ready to buy my first home?
The first home buyer status applies to individuals who are making their first property purchase.
Are you one of the many people looking to purchase their first home? Before diving head first into the search for your dream home, start by:
- defining your real estate project,
- calculating your borrowing capacity, i.e. the maximum amount you can borrow under your current circumstances.
To do this, you’ll need to identify:
- Your recurring income: wages, additional revenue from other sources, investments, etc. If your revenues tend to vary, calculate an average over one year.
- Your current debt ratio: do you have any outstanding loans (personal loan, student loan, car loan, etc.)?
- Your recurring expenses: food, car, insurance, healthcare, entertainment, etc.
- The future costs of your first property purchase: electricity, water, heating, land tax, home insurance, etc.
Banks generally consider two factors when calculating your borrowing capacity.
First, they look at the ratio between the cost of your existing loan repayments and your income. Then they check that your income will cover your living expenses after making your monthly payment.
Good to know
In Luxembourg, you’ll generally be asked to put down a deposit to finance part of your property purchase and the associated loan costs. But with BGL BNP Paribas, this isn’t necessarily required! It all depends on your personal situation. Please feel free to discuss these matters with your advisor.
What items should I include in the budget for my first home?
The purchase price of your first home will be the biggest item in your budget. However, other factors must also be taken into account:
- Notary fees: stamp duty, registry and other fees (including fees relating to requests for cadastral plans or administrative documents, for example)
- Mortgage fees (the main guarantee required by the Bank)
- Credit protection insurance: recommended, as this insurance covers any outstanding balance in the event of death or disability of any of the borrowers
- Moving costs
- Any renovation, restoration, furnishing or decoration costs, depending on the condition of the property.
The interest rate is important, but it’s not the only thing to consider
As first home buyers, we generally take the time to speak with a range of banks in order to obtain the lowest interest rate. However, interest rates shouldn’t be your only consideration when deciding which bank to go with.
Watch out for hidden costs attached to the loan:
- Current account maintenance fees
- Administration fees
- Early mortgage repayment penalties
- One-time advance fee (administrative fees for releasing the funds)
- Credit protection insurance and fire/civil liability insurance if offered by the Bank.
Compare the various loan offers received, their overall cost and the terms conditions. You can ask each bank for a European Standardised Information Sheet, which will allow you to compare each offer under the same criteria.
Good to know
To protect you and your loved ones, BGL BNP Paribas is able to offer credit protection insurance for your first property, thanks to its partner Cardif Lux Vie. A simpler and faster experience.
What home loans are offered to first time home buyers?
BGL BNP Paribas supports you throughout the entire process. Your advisor is here to answer your questions and help you set up the home loan that best suits your personal circumstances (2).
You and your advisor can define:
- The interest rate type: fixed, floating, adjustable or a combination
- The loan term: up to 30 years
- Your personalised repayment plan.
In addition, to help you get your foot on the property ladder while limiting the impact on your lifestyle, we offer two loan solutions suited to your personal situation:
- SmartHome, a loan with lower monthly repayments for the first few years
- The progressive repayment home loan, which adapts to changes in your personal situation.
(1) BGL BNP Paribas refunds you the fees for the minutes of the loan opening deed (mortgage deed). To do this, simply send the detailed invoice from the notary to your bank advisor.
(2) Offer subject to terms and conditions and approval of your application by the Bank.
Frequently asked questions
Yes, your broker will contact banks on your behalf to find the best rate for your real estate project. However, this will make it harder for your bank to take your personal situation into account, and to offer you a tailored solution.