Interest subsidy

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Summary:

You can apply for an interest subsidy for a mortgage loan taken out for the purchase or construction of a home subject to certain conditions.

The State may grant you an interest subsidy (interest aid) in order to reduce monthly costs in respect of a mortgage loan contracted for the construction, purchase or improvement of a dwelling used as a primary and permanent residence.

To calculate the interest subsidy, mortgage loans are taken into consideration up to EUR 200,000. This amount is increased by EUR 20,000 for each dependent child. The maximum amount to be subsidised is capped at EUR 280,000.

The interest subsidy rate depends on the income and composition of your household and can vary between 0.25 % and 3.50 %.

Who is concerned?

In order to benefit from the interest subsidy, you must:

  • be of legal age on the date the application is submitted;
  • have a right to stay in Luxembourg for more than 3 months and be listed in the National Registry of Natural Persons; and
  • be the owner of the home.

Prerequisites

Conditions relating to the mortgage loan

As the applicant for the subsidy, you must be the sole holder of the loan.

The mortgage loan must be taken out with a view to acquiring, building or a improving a home located in Luxembourg.

It must be taken out with a financial institution which is approved in the European Union and the European Economic Area (EEA), or with pension providers covered by the social security system.

Absence of other ownership

Neither yourself nor any other member of your household can be the owner of another property in Luxembourg or abroad.

Dwelling conditions

The dwelling for which the interest subsidy is granted must be used as your effective, primary and permanent residence for at least 2 years.

If the interest subsidy is paid for more than 2 years, the condition of primary and permanent residence must be met for as long as the subsidy is paid.

If you leave the dwelling during the period in which the subsidy is being paid, whether due to divorce, separation or any other reason, the Minister may, on written application and stating the reasons, grant the person who remains in the dwelling a provisional continuation of the interest subsidy for a maximum period of 2 years. If you continue to live in the property after this 2-year period and have taken over the dwelling and the mortgage on your own, you may apply for a continuation of the interest subsidy.

Conditions relating to income

Your household's income must be lower than the statutory limit.

Determining the household's income

The income used for the calculation of the interest subsidy is the income for the calendar year preceding the granting of the interest subsidy. In the event of a change of employer or of an amendment to the employment contract or if the household had no professional income during the year in question, the last known income is taken into account.

The household income which is used as the basis for the calculation is the sum of:

  • all net income used to determine the amount of income tax (for example: salary, pension, annuity), minus social security contributions and tax paid;
  • maintenance payments received;
  • accident annuities;
  • gross earnings allocated for overtime hours.

Maintenance payments made by you (for example for your children or to a divorced spouse) are deducted from the income.

Income from dependent children is not taken into account.

Social benefits are not taken into account to determine your household's net income, such as:

  • family allowance;
  • back-to-school allowance; and
  • cost-of-living allowance.

Deadlines

You can apply for an interest subsidy throughout the year.

How to proceed

Filing an application

If you wish to benefit from an interest subsidy, you must submit your application to the Single point of contact for housing assistance (Guichet unique des aides au logement) using a specific form (see form F1 under 'Online services and forms').

The completed and signed form along with all necessary supporting documents can be submitted to the Single point of contact for housing assistance:

  • by post; or
  • by depositing the form at their offices.

Note: applications submitted electronically (using the email address guichet@ml.etat.lu) must be confirmed by postal mail to the administration.

Supporting documents

You must attach the following documents to the application form:

  • a copy of your identity document;
  • a declaration concerning the composition of your household (see form L/A21 under 'Online services and forms'), duly filled in and signed by you;
  • a copy of the notarial deed of purchase of the property or the notarial deed in the case of a sale of property under construction (vente en état futur d’achèvement);
  • a certificate showing the details of the mortgage loan (see 'Online services and forms') issued by the credit institution;
  • a declaration of honour (see form A92 under 'Online services and forms') duly signed by yourself declaring that no member of your household owns another home in Luxembourg or abroad. If the application is submitted by multiple applicants, it is necessary to add an individually signed declaration of honour for each applicant;
  • documents providing proof of the household's income;
  • a certificate of affiliation to the Joint Social Security Centre for yourself and each member of your household; and
  • for third country nationals (including British nationals): a document proving your right to stay in Luxembourg for more than 3 months.

If you are married or in a registered partnership, the application must also be signed by your spouse or partner. This double signature is no longer required if divorce proceedings have been initiated or the partnership has been ended.

In the event of divorce, you must attach to your application a copy of the deed of settlement and partition, which stipulates that the property is allocated to you.

Family status

The family status taken into account is the one that exists on the date the interest subsidy is granted.

'Dependent child' is taken to mean:

  • any child for whom you receive a family allowance, who lives with you in the home and is registered there;
  • any child up until the age of 27 lives with you in the home is registered there and is co-insured in your health insurance scheme.

Assessment and granting of the aid

The interest subsidy rate is calculated on the basis of the composition and net income of your household and may vary between 0.25 % and 3.50 %, without exceeding the nominal rate of the loan the maximum rate of 6 %.

The interest subsidy is transferred to your bank account with the credit institution that granted the mortgage loan to finance the property. If you have a fixed-rate mortgage loan, the interest subsidy is transferred to the account you provided on the application form.

The interest subsidy is calculated on the basis of the interest due based on the amortisation schedule established by the credit institution.

However, when the interest rate used to calculate the interest subsidy is less than the reference interest rate set at 1.5 %, the rate of the interest subsidy is reduced by half of the difference between the reference rate and the effective rate rounded down to the nearest 8th of a point. The rate of the interest subsidy can never exceed the effective rate.

Example:

When the effective interest rate of the loan is 1.2 %, half of the difference between the reference rate and the effective rate rounded down to the nearest 8th of a point is 0.125. The difference between the reference rate and the effective rate is 0.3 % (1.5 % - 1.2 %). So the rate of 0.3 % must be halved (0.3 % ÷ 2 = 0.15 %) and rounded down to the nearest 8th of a point (0.15% becomes 0.125%). As a result, the interest subsidy granted will be reduced by 0.125 %.

Information obligation

You must notify the Single point of contact for housing assistance of any changes to your family status, financial situation or loan repayment schedule, such as:

  • another property acquisition, inheritance or donation;
  • a change in relation to the subsidised home (for example: transformation, sale of the home, etc.);
  • a change in the family status (for example: the dissolution of the household by separation or divorce; marriage; moving house; the arrival, departure or death of an occupant or child);
  • a change concerning the payment of family allowance or the child/children's health insurance cover;
  • a change of income or employer (for example: start, termination or amendment of the employment contract of a member of the household);
  • a change in the loan(s) for the property (for example: a change in interest rate or amount borrowed, early repayment, etc.).

Review of the file

Your file is automatically reviewed every 2 years.

If the conditions for continued subsidisation are met, the amount of the aid is reassessed on the basis of the new information. The reassessed aid is granted from the date of the review.

If, during this review, it is found that you have received undue financial aid, you must reimburse the overpayment retroactively.

Refunds

You must reimburse the interest subsidy if:

  • you have made inaccurate or incomplete declarations for the granting or maintenance of aid;
  • you have not respected the dwelling conditions regarding the subsidy; or
  • it was unduly received.

Refusal of aid

The subsidy is denied to you or discontinued if:

  • a member of your household (including yourself) already is or becomes the owner of another dwelling, whether in Luxembourg or abroad;
  • your application contains false or incomplete information;
  • you do not submit all the required documents;
  • one or more conditions for granting the aid are not met.

Combination with other types of aid

The interest subsidy may be combined with other aid in the form of a capital payment.

Online services and forms

Who to contact

Single point of contact for housing assistance

  • Ministry of Housing and Spatial Planning Single point of contact for housing assistance

    Address:
    11, rue de Hollerich L-1741 Luxembourg Luxembourg
    Phone:
    (+352) 8002 10 10
    Telephone: Monday to Friday from 8.00 to 16.00
    Email address:
    info@ml.etat.lu
    Closed ⋅ Opens Monday at 8.00
    Saturday:
    Closed
    Sunday:
    Closed
    Monday:
    8.00 to 12.00, 13.30 to 16.00
    Tuesday:
    8.00 to 12.00, 13.30 to 16.00
    Wednesday:
    8.00 to 12.00, 13.30 to 16.00
    Thursday:
    Closed
    Friday:
    8.00 to 12.00, 13.30 to 16.00
    Thursdays by appointment only

Related procedures and links

Procedures

Links

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