Calculate your renovation mortgage.

What is a renovation mortgage?

A renovation mortgage is an additional loan on top of your existing mortgage, specifically intended to finance renovations or improvements to your home. Your current mortgage continues unchanged. This means that, unlike with refinancing, no early repayment penalty applies. The process for applying for a renovation mortgage is similar to that of your first mortgage. You can apply for this mortgage with your current provider, but also with another provider. You can choose from various mortgage types.

A renovation mortgage can be tax-efficient, because the interest on a linear or annuity mortgage is deductible if you can demonstrate that the money is used for home improvement. The interest is not deductible if the loan is used for other expenses, such as a car or a second home.

Calculating a renovation mortgage

Whether you can get a renovation mortgage depends on factors such as your income, the size of your current mortgage, and the value of your home. We also look at any debts and other financial commitments, such as partner alimony. With our tools you can easily calculate the maximum you can borrow for a renovation.

Your gross income is the basis for calculating your renovation mortgage. You can borrow a maximum of one hundred percent of the value of the home. An existing mortgage continues to run, so you must include this loan in the calculation as well. The maximum amount you can borrow for a second mortgage loan is roughly the maximum loan based on your income minus the first mortgage.

Benefits of a renovation mortgage

If you meet all the conditions, a renovation mortgage gives you the opportunity to finance your renovation at a favourable interest rate. Your home serves as collateral, which lowers the risk for the provider. If you are unable to repay the loan, the provider can sell the house to recover the outstanding amount. As a result, you usually pay a lower interest rate than with a personal loan or consumer credit.

Alternative: increasing your mortgage

In some cases you can also increase your existing mortgage instead of taking out a second mortgage. This is possible if the registration with the notary is higher than the amount originally borrowed, or if you have repaid a lot, creating enough room. This is called a private increase. Another alternative is to make use of the surplus value on your home. The extra loan that becomes available can be used for home improvements, similar to a second mortgage. The major advantage of a private increase is that you do not have to go back to the notary, which saves costs. Keep in mind, however, that this ties you to your current mortgage provider.

Pros and cons of a renovation mortgage

The main advantage of a renovation mortgage is that you can choose which provider you want to take out the mortgage with. This gives you the freedom to find the best interest rate and conditions, even if that is with a different provider than your original mortgage. An independent mortgage adviser can help you compare the various options.

Another advantage is that with a renovation mortgage you can often borrow at a lower interest rate than with consumer credit. This is because your house serves as collateral, which lowers the risk for the bank. In addition, you can pay off existing loans, such as a personal loan with a higher interest rate, using your renovation mortgage. Keep in mind, though, that the interest is only tax-deductible if you use the money for home improvement.