Can you finance your renovation with a mortgage?

The housing prices are still rising, and buying another or new-build home has become virtually unaffordable for many people.

What do you do when buying another home is often not feasible, but you still want to live more spacious or modern? Then you can choose to renovate your home, thus ensuring more space, sustainability, and comfort.

If this is a good solution, then the question remains, how do you finance this renovation? We found out for you!

Financing a renovation can be done with savings, a personal loan, by increasing your mortgage, or by taking out a second mortgage.

But not everyone has that much money saved up, and there are certain drawbacks to a personal loan, such as higher interest rates and less flexibility.

That’s why we mainly look at the options within or alongside the current mortgage.

When increasing your mortgage or taking out a second mortgage, you have to deal with the current rules for mortgage lending.

For example, you must meet certain income standards, and the total mortgage must fit within 100% of the market value of your home.

Are you not only renovating but also making your home more sustainable? Then you even have extra room to borrow, up to 106% of the market value. You must, however, spend the extra money entirely on energy-saving measures.

Discuss with a mortgage advisor from Nobel Mortgages what the possibilities are and which option is best for you!

What is needed for financing a renovation?

For financing a renovation with a mortgage, you need a valuation report. This report includes the market value of your home before and after the renovation.

The appraiser needs insight into the renovation plans for this. Your lender expects you to carry out the renovation according to these plans.

How can you increase your current mortgage?

It depends on several factors. Did you already build in extra financial leeway for future adjustments to your home when taking out your mortgage? Then you can increase your current mortgage without having to go back to the notary again.

That’s definitely something to consider when taking out a mortgage, even though it’s sometimes difficult to predict what will be needed in the future.

A mortgage with extra room is called a mortgage with a higher hypothecary registration.

To ensure that you can afford the extra monthly payments later on, they look at your current income and the value of your house at this moment. You also usually need to provide an employer’s statement and a new appraisal report.

Taking out a second mortgage.

A second mortgage is usually taken out with the current lender.

If you want to take out the second mortgage elsewhere, the new lender usually requires you to transfer the existing mortgage as well. Whether it’s financially advantageous depends, among other things, on the interest rate and the refinancing costs.

Also, that’s something a good mortgage advisor can thoroughly research and calculate for you.

If you haven’t included the extra room in your mortgage when taking out your mortgage? That’s not a problem; even then, you can often increase your mortgage under the conditions that apply to people taking out a new mortgage, such as income information and an appraisal report.

The application for a second mortgage is a thorough and sometimes lengthy process.

Assume that the processing time is just as long as that of a new mortgage.

Because a new mortgage deed is required for this, unfortunately, you will incur notary fees. The mortgage interest on the portion you borrow additionally can be declared as a deductible on your taxes. As long as you repay the mortgage within 30 years.

Fun fact! A second mortgage for renovation is often referred to as a renovation mortgage. However, this is not a variant of a mortgage, but rather a reason to take out a second mortgage.

Do you want to know what is possible for you in terms of renovating and making your home more sustainable? And how much money you could approximately borrow? Nobel Mortgages can help and advise you on what suits you best. We’ll find out everything for you!

We are available to you 24 hours a day with the utmost commitment and sincere attention. An email can easily be sent to info@nobelhypotheken.nl or call or text at 06-54770122.