What if you took advantage of the new year to review your mortgage at this stage? While the Luxembourg market has begun to shift, several important trends are emerging — including interest rates that now tend to stabilise. But is your loan contract still optimal today? Take the initiative and don’t let your bank quietly benefit from your interests.
The Interest Rate: Fixed, Variable or Adjustable?
The type of interest rate you have is the key issue. To find out which one applies to you, simply check your latest statement.
If you took out a variable-rate loan in recent years, your monthly payments were likely directly affected by ECB decisions. But at the beginning of 2026, the situation is changing. This is therefore the right time to compare your current rate with market offers.
If you notice a difference of more than 0.7% between your rate and current market rates, renegotiating now is clearly worth considering. Of course, renegotiation conditions vary depending on the type of rate — which makes it all the more important to review your situation carefully.
“Don’t hesitate to compare your current rate with market offers.”
Outstanding Balance Insurance (Life Insurance)
Many borrowers underestimate the weight of life insurance linked to their mortgage. Yet, under certain conditions, it is tax-deductible — and missing out on this optimisation would be a shame.
Two points should be checked: is your coverage still aligned with the evolution of your outstanding balance? And is the premium still competitive? Simply changing your insurance during the loan term can save you several thousand euros over the lifetime of your project — without reducing your level of protection.
Loan Flexibility Over Time
As your life evolves, your loan should follow. That’s why it’s essential to reread your general terms and conditions carefully. Can you increase or reduce your monthly payments without fees? Many borrowers have this flexibility — a real advantage — without even being aware of it.
If you’ve recently received a salary increase or an annual bonus, you could increase your monthly repayment by, for example, 10%. This may shorten your loan duration by several years and allow you to move on to new projects sooner.
Renegotiation Options
Keep this in mind: always being overly accommodating with your bank will not benefit you. If current rates are lower than your contractual rate, contact your advisor to explore your options.
Pay close attention to early repayment penalties. These are capped for variable-rate loans but can be significantly higher for fixed-rate loans. To help with decision-making, calculate the “break-even point” — the moment when interest savings exceed fees and penalties. If this point is reached within 24 months, it’s time to act.
“Calculate the break-even point: when interest savings exceed fees and penalties.”
Your Monthly Payments
The cost of living in Luxembourg remains high. Is your debt ratio still healthy, and does it allow you to live comfortably? Ideally, housing costs should not exceed 33% to 40% of your net disposable income.
If your budget feels too tight, restructuring your loan or extending its duration (if your age allows) can be effective levers. Acting early can help restore breathing room in your daily finances.
