Buying a new-build home
Why should you think about moving, when you could also make your current house bigger, more cosy or more energy efficient? Renovation will of course cost you money, and you could choose to use your savings for this. If you don't have sufficient savings, or when you do not want to you use your savings for this purpose, it's good to find out whether it's possible to increase your current mortage. Below you'll read more.
How does it work to apply for a mortgage for renovation?
You could choose to keep the mortgage with your current mortgage provider, or you could choose to refinance with another mortgage provider. Below you'll read more about these three options:
1. Increasing the mortgage without going to the notary
If there is a higher amount registered in your notary contract, you can increase your mortgage without going to the notary. This means you save on notary fees! Using this option means the interest rate for your current mortgage rate will remain unchanged, and for the extra part you'll get the interest rate of today.
2. Second mortgage
If the current notary contract does not contain a higher amount, you can apply for a second mortgage. A second mortgage means you'll have to visit the notary again, meaning you'll have to pay a notary fee. Using this option also means the interest rate for your current mortgage rate will remain unchanged, and for the extra part you'll get the interest rate of today.
3. Refinancing your current mortgage
It's also possible to refinance and switch your mortgage to another mortgage provider. In this process, you can choose to increase the amount you refinance, to finance the renovation. By doing this, the full mortgage will get the interest rate of today.
Calculate your maximum mortgage
Is it always a good idea to finance the renovation by increasing the mortgage?
When you're going to finance the renovation by increasing your mortgage, there will always be costs involved. Your monthly amount will increase, and you pay some additional fees when closing the mortgage. This is for example the fee you pay to a mortgage advisor, a notary, and someone to do a valuation. We recommend you therefore to consult a mortgage advisor to check whether this is a good idea and whether you can afford the extra monthly amount and the additional fees. You might have suffcient savings, or you might choose to wait a little bit untill you have saved enough. It can also be interesting to take out a personal loan instead of a mortgage. We of course gladly help you in calculating what the smartest choice is.
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Am I eligible for tax deduction when I increase my mortgage for renovation?
When you pay back the mortgage within 30 years, either by an annuity mortgage or with a linear mortgage, the interest is tax deductible. You normally receive this tax benefit once a year when you file your tax report. You can also choose to file a preliminary tax report, which means the tax authority will prepay you a monthly amount as tax benefit.
1. Considering your options
It's good to first have an idea about what the renovation is going to look like and what the costs are. Ask offers with multiple contracters or suppliers to get a good idea about this. It's also wise to consult a mortgage advisor to check how much increase of the mortgage you would be eligilble for. This first call is always free of charge and without any strings attached. You can call or email us as much as you like when you have questons!
2. Advisory call
In this call we discuss the most important elements of the mortgage that best suits your needs. When you increase the mortgage, there are a couple of things to think about: the exact amount, the period to fix the interest rate and the form of paying back. This could be annuity, linear or interest only. When you refinance the mortgage and switch to another mortgage provider, we also compare the different terms and conditions that mortgage providers offer. We also look at income risks, such as the risk of death, professional disability and unemployment. Any insurances to cover this risk will be presented to you. After the call, you'll receive the advisory report. This is a summary of everything we discussed, to read at your own convenience.
3. Starting the mortgage application
The mortgage advisor will start the mortgage application for you. After this, you'll get an indication of all documents necessary to comnplete the application. In most cases, you'll need a new valuation report to prove the market value. In this valuation report the appraiser will take into account the extra value that potentially comes from doing the renovation.
4. Signing the offer
When the mortgage provider has accepted your application, you'll receive a binding offer. After signing the binding offer, your mortgage has been arranged. When you take out second mortgage, you have to visit the notary again, where you sign a new mortgage deed.
5. Let the renovation begin!
In most cases, the money for the renovation will go in a buiding depot. You can claim these funds by sending an renovation invoice to the mortgage provider. Let the renovation begin!