Interest subsidy
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The interest subsidy is a form of interest aid from the State that may be granted in order to reduce monthly costs for repaying a mortgage loan contracted for the construction, purchase or improvement of a dwelling used as a primary and permanent residence. This residential status must be maintained for as long as the aid is paid to the beneficiary.
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 can vary between 0.25 % and 2.45 %. It is based on your income and family status.
Who is concerned?
If you are legally resident in Luxembourg and have taken out a mortgage loan to:
- purchase;
- build; or
- improve
a dwelling in Luxembourg, which serves as a primary and permanent residence for you and your spouse and children (if any), you can apply for the interest subsidy.
Prerequisites
If you wish to benefit from the interest subsidy, you must:
- reside in Luxembourg;
- have contracted a mortgage loan from an approved financial institution in the European Union and the European Economic Area (EEA), or from a social security-related pension institution, to purchase or build a dwelling in Luxembourg that you must use as your effective, primary and permanent residence for at least 2 years. Loans are taken into consideration up to EUR 200,000;
- be neither the owner nor the legally entitled user (usufructuary) of another dwelling in Luxembourg or abroad;
- be the sole holder of the loan.
How to proceed
How to apply for the interest subsidy
To submit your application, you must complete the individual housing benefit application form (see 'Online services and forms') and send it to the Housing Aid Service (Service des aides au logement).
The application may be filed jointly with the application for a construction, purchase or improvement incentive
Supporting documents
The following documents must be submitted with the application:
- a copy of your identity document;
- a declaration concerning the composition of your household, duly dated 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 mortgage certificate issued by the credit institution;
- a sworn statement signed by yourself certifying that the members of your household have no other property in Luxembourg or abroad;
- documents providing proof of the household's income;
- a certificate of affiliation to the Joint Social Security Centre for each member of your household; and
- at the Minister's request, if any: a certificate of the duly registration of the mortgage document.
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.
Your file is automatically reviewed every 2 years.
You must notify the Housing Aid Service of any changes to your family situation, financial situation or loan repayment schedule.
If the data in the file justify increasing the interest subsidy rate, this increase will be effective starting from the date of re-examination
Family status
The family status taken into account is the one that exists on the date the interest subsidy is granted.
The following children are considered as dependent:
- any child for whom you receive a family allowance, who lives with you in the home and is registered there;
- any child up to 27 years of age, who lives in the applicant's home and is declared as living there, and who is covered by the applicant's health insurance, either due to their family ties with them, or pursuant to the laws of a State with which Luxembourg is linked by a bi- or multi-lateral social security instrument, or pursuant to a health insurance scheme due to an activity in an international organisation.
You must notify the Housing Aid Service of any changes to your family situation, financial situation or loan repayment schedule.
Calculating income
The income used for the calculation of the interest subsidy is the last known income at the time of the granting of the interest subsidy.
Thus, the income to be taken into account is the taxable income plus all other income, including non-taxable income you may have including that of any other person living with you in the dwelling in question, without taking into account:
- family benefits;
- state financial aid for higher education;
- orphan's pensions;
- allowances for severely disabled people;
- long-term care insurance payments.
All changes in family status, financial status, or loan amortisation schedule must be reported to the Housing Aid Service.
Reimbursement of the interest subsidy
If one of the conditions for granting the interest subsidy is no longer met, the interest subsidy must be repaid with retroactive effect.
The dwelling for which the interest subsidy is granted must be used as the beneficiary's primary and permanent residence for at least 2 years, failing which the beneficiary will have to repay the subsidy.
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 mortgage on your own, you may apply for a continuation of the interest subsidy. In this case, you must be the full and exclusive owner of the property.
Moreover, if a housing incentive must be reimbursed to the State, the interest subsidy is no longer due and must also be reimbursed with retroactive effect
Criteria for calculating the interest subsidy
The interest subsidy rate is calculated on the basis of taxable income and marital status and may vary between 0.25 % and 2.45 %, but it cannot exceed the maximum rate of 3 %.
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 is 1.2 %, half of the difference between the reference rate and the effective rate rounded down to the nearest 8 th 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 %.
| Type of houshold | Maximum rate of interest subsidy | Minimum rate of interest subsidy | Annual net income ceiling (in EUR) for the maximum rate | Annual net income ceiling (in EUR) for the minimum rate |
|---|---|---|---|---|
| Single person | 2,45 % | 0,25 % | 2.805 | 3.913 |
| Household without children | 2,45 % | 0,25 % | 4.207 | 6.003 |
| Household with 1 child | 2,45 % | 0,25 % | 5.329 | 7.083 |
| Household with 2 children | 2,45 % | 0,25 % | 6.451 | 8.015 |
| Household with 3 children | 2,45 % | 0,25 % | 7.573 | 8.709 |
| + each additional child | / | / | + 841 | + 968 |
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 current account you provided in your application.
The interest subsidy is calculated on the basis of the interest due based on the amortisation schedule established by the lending institution.
| Time elapsed (in months) | Balance (in EUR) |
|---|---|
| 0 | 200.000 |
| 24 | 188.895,91 |
| 48 | 177.110,44 |
| 72 | 164.601,76 |
| 96 | 151.325,51 |
| 120 | 137.234,58 |
| 144 | 122.278,99 |
| 168 | 106.405,66 |
| 192 | 89.558,29 |
| 216 | 71.677,10 |
| 240 | 52.698,67 |
| 264 | 32.555,65 |
| 288 | 11.176,58 |
| 300 | 0,00 |
All changes in family status, financial status, or loan amortisation schedule must be reported to the Housing Aid Service.
Accumulation with other aids
The interest subsidy may be cumulated with:
- purchase, construction or improvement incentives;
- the savings subsidy;
- aid for special home transformations to adapt to the needs of disabled persons; and
- general home purchase savings aid.
Useful information
The law on interest subsidies changed on 1 September 2023.
If you were awarded an interest subsidy before this date, you will continue to receive this aid for 24 months from the last review of your file. If, at the time of the next review, it is found that you are entitled to a higher amount of interest subsidy as calculated on the basis of this new law, the difference will be transferred to your bank account. The amount is calculated from the date on which the new law comes into force, i.e. from 1 September 2023.
If you received an interest subsidy and interest relief before 1 September 2023, you will continue to receive these two forms of aid for 24 months from the last review of your application. The next time your file is reviewed, the total amount of the interest subsidy and the interest relief will be taken into account on the amount of the interest subsidy under the new law.
If you are in receipt of interest relief only, you will continue to receive the same amount for 24 months from the last review of your dossier. You can also apply for an interest subsidy in accordance with the new law.
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
- Fax:
- (+352) 458 844
- Email address:
- info@ml.etat.lu
- Website:
- http://www.logement.lu
Closed ⋅ Opens tomorrow at 8.00
- Thursday:
- Closed
- Friday:
- 8.00 to 12.00, 13.30 to 16.00
- 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
Thursdays by appointment only
Related procedures and links
Procedures
Links
Further information
sur logement.lu
Legal references
-
Loi du 7 août 2023
relative aux aides individuelles au logement
-
Règlement grand-ducal du 7 août 2023
fixant les modalités d’exécution relatives aux aides individuelles au logement.
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