CSSF Regulation No 20-08 of 8 December 2020 is a CSSF regulation laying down the conditions for granting loans for residential property located on Luxembourg territory, published 8 December 2020.
\nRelevant for: Credit institutions, Mortgage credit intermediaries.
\nTechnical FAQ on Regulation CSSF No 2008 on borrower-based measures for residential real estate credit VERSION OF 9 March 2026
\nTechnical FAQ on Regulation CSSF No 20-08 on borrower-based measures for residential real estate credit The Loan-To-Value (LTV) limits introduced by CSSF Regulations No 20-08 (hereinafter referred as “the CSSF Regulation”) require borrowers to satisfy specific own funds requirements in order to qualify for mortgage loans granted for the purchase of real estate in Luxembourg. This FAQ aims to clarify the implementation aspects associated with the LTV measure in place.
\nHow should own funds be calculated for the purpose of the LTV requirement? The aim of the CSSF Regulation is to limit leverage. Thus, it is expected that the own funds part in financing a residential real estate property is made up by an actual equity contribution from the borrower according to the applicable LTV limit set out in the Regulation. For the purpose of the LTV computation, “L” refers to the sum of all loans or loan tranches secured by the borrower on the immovable property at the moment of loan origination, whereas “V” refers to the value of the property purchased. The difference between the value “V” and the loan amount “L” needs to be made up of actual own funds of the borrower. Until 31 March 2027, the State guarantee can be considered as own funds for the purpose of the LTV requirement but should only be permitted for loans that had an initial LTV requirement not exceeding 100% in accordance with the maximum limits set out in the Regulation. For the cases where the borrower provides own funds for the compliance with the LTV requirement that consist of the amount corresponding to the State guarantee, these should be deducted from “L” for the purpose of the LTV computation calculated in accordance with the CSSF Regulation.
\nWhat type of collateral is included in the “V”? The “V” refers only to the transaction value or the independently estimated value of the property purchased (whichever is lower). The “V” does not take into account the value of any other property given as collateral to secure the loan or the value of other types of collateral (e.g. a securities portfolio, cash collateral).
\nHow are bridge loans to be treated? Bridge loans are non-amortising real estate loans that are used to facilitate a transaction. They are used to finance a newan existing property for a limited period of time until an this existing property has been is sold. It is common practice that a part of the own funds that are to be put down for the new property come from the sale of the existing property. Such practice remains compatible with CSSF Regulation. When a borrower uses a bridge loan to purchase a new property while already owning a mortgagefinanced existing property, the borrower needs to respect two LTV ratios, to be satisfied exclusively at the origination of the bridge loans: 1) the “global LTV”, where L includes the loan secured by the new property purchased and the outstanding loan amount on the existing property (the one to be sold) and V includes the value of both the property currently owned and the property purchased. The global LTV limit has to be satisfied at the origination of the bridge loan; TITLE TECHNICAL FAQ ON REGULATION CSSF NO 20-08 ON BORROWER-BASED MEASURES FOR RESIDENTIAL REAL ESTATE CREDIT TITLE TECHNICAL FAQ ON REGULATION CSSF NO 20-08 ON BORROWER-BASED MEASURES FOR RESIDENTIAL REAL ESTATE CREDIT VERSION OF 9 MARCH 2026 2/5
\nThe text above is the opening of the document; the PDF carries the whole.
\nDocument page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.
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