Creating a new kitchen, an extra bedroom, an extension, solar panels or a workspace in the house: many homeowners sometimes consider renovating their house, but this costs money. Borrowing money for renovation is then a solution. There are various ways of borrowing money for renovating your home, such as:
- Borrow money for renovation?
- Take out a revolving credit
- Increase your mortgage
- Take out a second mortgage
- Construction depot or renovation depot
- Special loan for energy-saving renovations
Personal payday loan for renovation
With a personal payday loan, you do not have to meet a certain minimum amount. For smaller renovations and for tenants, the personal payday loan is, therefore, an interesting way to borrow money for a renovation. You borrow a fixed amount and you repay a fixed amount each month. So you know in advance exactly how much you pay each month and when you will finish paying off. If you can demonstrate that you are putting the borrowed money into the renovation of your home, you are entitled to a mortgage interest deduction with this loan. But the interest on a personal payday loan is higher than the mortgage interest.
Borrow money renovation – Revolving credit
With a revolving credit you agree a credit limit with the bank where you can withdraw money. You do not follow a fixed repayment schedule, because you can always withdraw repaid money. But you only pay interest on the amount that you have actually withdrawn. That is why a revolving credit suits you well if you don’t know exactly how much money you need. However, a revolving credit is not that interesting for a renovation, as this loan is not eligible for mortgage interest relief.
Borrow for home renovation – Increase mortgage
If you buy a house and you expect that you will renovate the house, you can register the mortgage higher in the Land Registry registers. You can then increase your mortgage at a later time without the notary having to register the mortgage deed again. If you have not done this, you can opt for a second mortgage to finance the renovation. You will then again have to pay notary fees for the mortgage deed.
The advantage of financing the renovation in your mortgage is that you pay a lower interest rate than on a consumer credit. You are also entitled to a mortgage interest deduction, provided that you opt for an annuity mortgage or a linear mortgage. But banks often make it a condition that you borrow a minimum of 25,000 euros, so these options are not interesting for a small renovation. Moreover, banks often demand that you have surplus value if you increase the mortgage.
Borrow money for renovation – Close construction depot later
You can also borrow money for the renovation of your house in the form of a construction or renovation depot. You close this deposit as part of your mortgage. The bank deposits money in the deposit, at least 2,500 euros. With this money you pay the renovation bills. You receive interest on the money that you have not yet withdrawn. At the same time, you pay mortgage interest on the remodeled depot, because the depot is part of your mortgage. That is why you are immediately entitled to the mortgage interest deduction if you opt for a construction or renovation loan.
The advantage of a home construction account compared to raising your mortgage is that you can also borrow a lower amount than with a higher mortgage. In addition, you receive interest on the amount that is still in the home construction account.
Construction loan – Sustainable
A final way to borrow money for the renovation of your home is a special loan for sustainable renovations. Some municipalities offer these loans and Get Loan also provides these loans. Of course you can only take out this loan if the renovation is energy-saving. Always ask the municipality and Get Loan about the options and conditions.