FINANCING YOUR PROPERTY PROJECTS IN LUXEMBOURG AND ABROAD. Our private banking services

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1 en FINANCING YOUR PROPERTY PROJECTS IN LUXEMBOURG AND ABROAD Our private banking services

2 For many of our clients, their main residence, a second home or a buy-to-let investment constitutes a major component of their assets. Real estate is a way of diversifying a portfolio or investing for the future. Our bank has been operating in Luxembourg since 1920 and over the years we have gained extensive experience in the financing of property projects. Loans are just one aspect of the service we offer clients for the management of their assets. Financing solutions are provided based on analysis of the client s family situation, their investments (including property and other assets) and the aims of their prospective acquisition. We adopt the same prudent approach to lending that we apply to managing our clients assets. We advise clients on property investments that make sense from a long-term wealth management perspective. In the current economic and financial environment, it is vital to have a solid banking partner. We are recognised as being one of the key players in the Luxembourg financial centre. Your private banking adviser would be delighted to discuss your plans with you. ETIENNE PLANCHARD Head of Credit Department Member of the Management Committee 3

3 OUR PRIVATE BANKING SERVICES BUYING YOUR MAIN HOME OR SECOND PROPERTY I ve been a client of Banque de Luxembourg for over ten years. I started by opening a savings account with them; it s carefully managed and produces steady income. In 2008, in the middle of the financial crisis, I got the opportunity to buy a house in the Belair district of Luxembourg. It was a significant investment, but you have to take the opportunity when it comes along. The Bank helped me assess the risks and find the best mortgage for my family situation. We found a solution that I m very happy with. This helped me invest with peace of mind. George (45) WHAT WE OFFER When you want to buy, extend or renovate your main home or second property: Tailor-made financing solutions: setting up a financing plan, analysing alternative ways of providing a deposit, possibility of using a securities portfolio as collateral Tax-efficient solutions Bridging loans to support temporary cash requirements pending the sale of your current home, for example Assistance with financing and valuation of second properties in certain holiday destinations. 4

4 01 Loan application Identification of the property to be financed Reviewing various financing scenarios Simulation of tax impact on your total assets Verification of price per m 2 and estimate of additional fees Second property Appraisal of the property by a thirdparty expert Analysis of alternative holding vehicles 02 Setting up the loan Financing offer Arranging the collateral Notarised deed & provision of the loan Second property Notarised deed in the country where the second property is located (France, Belgium and Germany). 03 Completion of project Use of the loan according to agreed terms Application for grants and subsidies Bank You 04 Management of the investment over time Repaying the loan Advice on inheritance planning with regard to the property Second property Short-term rent and management of crossborder tax implications Cross-border inheritance considerations 5

5 OUR PRIVATE BANKING SERVICES INVESTING IN A BUY-TO-LET I invest in real estate to diversify my assets. Renting out property provides me with additional income. I m self-employed. At the Bank, they understand that my business, personal and family assets are tied in together. I really like their pragmatic approach and the way they look at the bigger picture. My adviser helped me draw up a financing plan incorporating all my personal assets and investments and suggested I should take out a mortgage rather than use my savings. So I continue to earn income on my investments, while cutting the tax bill. He found an ideal financing solution for me in no time. I was really pleased to find that the costs were very competitive... and that they included the advice. So I decided to go for it! Kate (57) OUR SERVICES For your buy-to-let projects: Tailor-made financing solutions: setting up a financing plan, analysing alternative ways of providing the deposit and guarantees Analysing the costs and income related to acquiring and managing the property Advice on repayment schemes and schedules that fit your personal situation Tax optimisation for your purchase and rental income Assistance for setting up specific insurance policies depending on the type of investment envisaged. 6

6 01 Loan application Identification of the property to be financed and initial financing plan Alternative financing scenarios Estimate of additional fees Verification of price per m 2 Simulation of tax impact on your total assets 02 Setting up the loan Financing offer Arranging the collateral Notarised deed & provision of the loan 03 Completion of project Use of the loan according to agreed terms Application for grants and subsidies 04 Management of the investment over time Repaying the loan Advice on inheritance planning with regard to the property Bank You 7

7 OUR PRIVATE BANKING SERVICES FINANCING YOUR PROPERTY PROJECTS: HOW IT WORKS Our credit specialists analyse your tax, asset, financial and personal situation to ensure that you have the best solution. Here are some practical aspects that you should take into account: How much deposit do you need for a mortgage? Generally, the deposit is 20% of the purchase price for your main residence but it can be up to 30% for a buyto-let or second home. As an alternative to a cash deposit, it may be possible for investment assets to be used as collateral. A portfolio of securities may be transferred to the Bank as a guarantee. What guarantees are required? To finance your main property, a first-ranking mortgage is required with the appropriate mortgage insurance. For buy-to-let, additional guarantees may be required: salary transfer, rent transfer, a mortgage mandate, a commitment not to mortgage or to promise to mortgage, credit transfer etc. Fixed rate or variable rate? The lending rate depends on the amount borrowed, your repayment capacity and the guarantees given. We also offer interest rate packages. Variable rate - a variable rate is an interest rate which can fluctuate up or down according to market conditions and the principles governing the loan. Fixed rate as the name implies, fixed-rate mortgages remain unchanged during the agreed loan period. A fixed rate is generally higher than a variable rate but its main advantage is security as you know from the outset how much your monthly payments will be and the total cost of the loan. Fees charged to you As well as the interest charged on the debit balance, we charge one-off application fees of 0.1% of the amount borrowed (minimum EUR 250) as well as the administrative costs of analysing your mortgage application. How is the loan drawn down? The loan may be drawn down as a lump sum or in stages to cover building or renovation work. How many years can the loan be for? The duration of your loan depends on your age, the amount of the loan and your repayment capacity. Loans are granted for a maximum period of 20 years (for buy-to-let) or up to 25 years (for the main residence). Repaying your loan Generally, you repay your loan on a monthly basis, but depending on when you receive your own income, we may be able to arrange different repayment terms, such as quarterly, six-monthly or annual repayments. You can also make bigger one-off repayments, or even repay the entire loan early (with no penalties for variable-rate mortgages). 8

8 As a general rule, the monthly repayment for all your mortgages combined should not exceed 35% of your net disposable income. What are the possibilities for tax optimisation? Whether you are considering the acquisition of your main home or buy-to-let investment, there are numerous possibilities for tax optimisation including total or partial deduction of interest on the debit balance, rental losses, and accelerated amortisation. See the booklets on tax optimisation for the main residence or buy-to-let investment included with this brochure. 9

9 OUR PRIVATE BANKING SERVICES INTERESTED IN APPLYING FOR A LOAN? Our advisers are here to discuss your project in light of your tax, asset and personal situation. Please arrange a meeting or come and see us for a preliminary discussion. If possible, please bring the following documents with you: Preliminary sales agreement, estimate for building work or other documents describing the property to be financed (such as a property valuation) Your last three salary slips and a copy of your latest tax return if you are taxed jointly Information on your assets and liabilities (financial expenses, properties, other income, etc.). And if you can provide us with a preliminary financing plan setting out your budget and repayment capacity in relation to the proposed project, this would be helpful. 10

10 This brochure does not constitute a firm offer. It is solely for information purposes and under no circumstances does it represent a recommendation or solicitation to purchase. Figures are provided in good faith and may fluctuate according to market developments. The provision of this information does not oblige the Bank to grant a loan on the terms and conditions described. The contractual relationship between the Bank and the borrower will be governed by a loan agreement following a mortgage offer by the Bank.

11 Established in 1920, Banque de Luxembourg is one of the leading private banks on the Luxembourg financial market. Its clients are individuals, families and entrepreneurs located in Luxembourg and across Europe. As well as providing investment advice, its core business has always been asset protection, capital-generation and estate transfer. Finance for property projects is just one aspect of the support the Bank provides its clients in the management of their assets. Banque de Luxembourg 14, Boulevard Royal, Luxembourg-Centre Monday to Friday from 8.30 am to 5 pm Tel.: (+352) BL/2013/0003/EN - RCS Luxembourg B5310 / Photos : Richard Bryant, Amit Geron arcaidimages.com / Cécile Septet / Armand Quetsch / Gerard Uferas