You sign a deed of sale of property off-plan which provides that the total price is paid in instalments, based on the progress of works.
This type of contract is governed by the laws of Luxembourg.
The promoter is required to offer you a completion guarantee, which will be annexed to the notarial deed of sale and registered with him.
Through this guarantee, a bank undertakes to pay the sums necessary for the full completion of the construction in accordance with the terms of the contact, should the seller not fulfil his completion obligation.
The bank may replace this completion guarantee by a repayment guarantee. In that case, it undertakes to repay the buyer the instalments paid by the latter.
Besides the deed of sale, you also sign the co-ownership deed, which specifies the common areas.
The Co-ownership rules define the rules for joint living conditions among the co-owners.
When you receive your new accommodation, a delivery report mentioning any shortcomings and defects is drawn up. By countersigning this report, the builder undertakes to carry out the necessary works at the earliest.
The ten-year guarantee given by the builder covers the building against latent defects for a period of 10 years as from the delivery of the apartment.
The opinion of a building expert can also be useful to estimate the value of the building, detect latent defects (cracks, humidity) and estimate the costs of repairs to be carried out.
When you have found a suitable house or apartment, you can sign a pre-contract.
If the buyer finances the purchase of the property through a loan, it is usual practice to add to the pre-contract a suspensive clause providing for the outright cancellation of the pre-contract if the necessary funds are not obtained from the bank.
Some renovation or transformation works may be vital.
In that is the case, do not forget to apply for the necessary permits at the local Authority.
The Local Authority, the Land Registry, your notary and your architect can give you the answers to these questions.
Possibility of taking up a loan with the interest rate partly variable and partly fixed in order to balance the risk.
In principle, repayment starts as from the grant of the home loan. However, most lending institutions allow the borrower to start repaying after a period of use to be agreed upon this is the deferred capital repayment.
Thus, if you have purchased a dwelling for which the construction or renovation is not yet completed and you are still paying rent for your current accommodation, you refund only the interests due over that period until you move house. The “normal” monthly payments are only paid as from the time you move house.
Take one third (33%) of your permanent income as a benchmark to make a good decision on the part of your budget to be allocated to monthly repayments of your home loan.
Do you wish to ensure that your budget is balanced? Maintain a suitable standard of living, taking into account your permanent income and your fixed expenses.
|The repayment capacity recommended in this example is:
Monthly disposable income (5 756.00 €) x 33 % (i.e. one third of your income)
|= 1,899.69 €
|Net monthly income of husband (after taxes)
Net monthly income of the wife (after taxes)
+ Family allowances
+ Other fixed income (after taxes)
|- Current monthly expenses (current loans, insurance premium…)
|NET MONTHLY DISPOSABLE INCOME
This difference must not exceed +/- a third (1/3) of the monthly disposable income to ensure a decent standard of living.
The grant of a home loan is subject to certain basic conditions as well as guarantees required by the lending institution.