How do I apply to finance a property purchase?

Determining your available budget 

The first step before considering a property purchase is to determine the budget you can afford.

Analyse your spending over the last three-to-six months. Try to work out how much you spend on housing, ancillary expenses and leisure activities. How much of your income are you able to set aside for unplanned expenses? This analysis will enable you to establish a realistic available monthly budget to put towards a property project.

Using the tools available to you on bgl.lu, you can work out your borrowing capacity based on your income and expenses by calculating a maximum monthly repayment and a property price.

Requesting an agreement in principle 

To validate your simulation, you should then ask BGL BNP Paribas for an agreement in principle. You will then receive a formal agreement for a monthly payment that is valid for six months.

Documents to be provided in relation to an agreement in principle 

 

To obtain an agreement in principle, you will need to provide various documents relating to your financial situation. Current regulations require us to carry out a rigorous solvency study.

A non-exhaustive list of documents that can be sent directly via the secure messaging service:

• your last three payslips;
• account statements for the last six months for all accounts you have with other banks in Luxembourg or other countries;
• your CV, if possible;
• details of any loans you may have (loan agreements, balances, amortisation schedules if available, etc.).

If you already have a particular house or flat in mind, you can also send us all the documents we need to better understand your project and assess the mortgage guarantee. These may include photos and plans of the property, specifications, property valuation (expert report), energy passport, etc.

Signing the sales agreement  

Have you found a property suited to your needs and budget? Then you can present your agreement in principle and make an offer. If the seller accepts your offer, a sales agreement is then drawn up by the owner or the estate agent.

Before signing the agreement, first check that it contains a conditional clause for obtaining financing. Under such a clause, the obligation to purchase the property will only take effect if you obtain a loan from the bank. This clause generally provides for an average period of 30 days from the signing of the agreement to enable you to obtain a mortgage.

Please note: Signing the sales agreement is binding since it is considered as a firm sale. In the event of withdrawal, a penalty of 10% of the sales price, which is a standard provision in such an agreement, is applied.

Requesting financing from BGL BNP Paribas  

Once the agreement has been signed, if this is the first loan you have taken out in Luxembourg, you can continue the process of obtaining financing in your secure Web Banking area by simulating and personalizing your financing plan (property price, mortgage term.)

 

Documents to be provided as part of a mortgage application 

You will be asked to send a range of supporting documents relating to your project via the secure Web Banking messaging service. This includes all documents relating to the property so that we can fully understand your project and evaluate the mortgage guarantee, i.e.:

• the signed agreement (if available) and, if applicable, the advertisement, photos, description and/or web link of the property to be purchased;
• plans and specifications in the case of a sale in future state of completion;
• the energy passport for the property, whether new or existing;
• estimates if any work is required;
• ideally, copies of general meetings to check whether there is any work planned in the building or what expenses can be expected, etc.

Signing the contract  

Your BGL BNP Paribas advisor will present you with a personalised loan offer and you will be invited to sign your mortgage agreement at your local branch.

 

 

Signing the deeds before a notary  

You can make an appointment with a notary to sign the deeds. If necessary, make sure you transfer your deposit to your BGL BNP Paribas account no later than 48 hours prior to the appointment. The bank will confirm that the funds were then sent to the notary.

On the day of the appointment, you will sign the notarial deed and the mortgage agreement. The notary will take care of the formalities.