Are you planning to refurbish your kitchen, bathroom or garden soon, or perhaps put a new veranda? If you do not have enough resources to finance these works or you prefer not to save your savings, you can always apply for a loan. For this you have 2 possibilities: the renovation and housing loan.
If you wish to apply for a home loan for your renovation work, you can choose from two options: borrow a new loan or add an additional amount to your existing home loan, provided you have already paid a significant amount.
- Existing home loan: If you have already redeemed part of your mortgage credit, you can borrow an additional amount for your renovation work by reorganizing your credits. You will then not have to pay additional fees (fees and fees, etc.). Only the bank charges file for the reorganization of your credits has to be paid. In addition, you can borrow at the market interest rate because it is not considered a new credit institution by the bank.
- New home loan: In case the available amount on your credit is insufficient to finance your renovation work, you can take a new mortgage (security) on your home. You will then have to pay a deed fee. These costs are not negligible because they represent a few percent of the loan amount. In addition, you must take into account the file costs, which apply to the opening of a credit line.
When to use?
The loan will only be available if you plan to borrow large sums. This loan allows you to pay off the capital over a longer period of time, while lending you with more advantageous interest rates with the reason that the property is collateral. In addition, the paid interest on capital is tax deductible to a certain amount .
The tax benefit of the home loan is “pushed” by the high transaction costs and the long term to close them.
The renovation loan is primarily intended to finance renovation and renovation works , which must be proven by means of an invoice or quotation. The interest rate you can borrow is fixed for the entire term of the loan. Unlike the housing loan, you do not have to collateral with a renovation loan. In addition, you will not be required to pay file or file fees.
In addition, the interest paid on the loan amount is tax deductible under certain conditions .
If the work on your home is aimed at saving energy , then you can borrow at very low interest rates. The various regions also provide premiums.
When to use?
This loan allows you to borrow smaller amounts (from € 2,000). Because a renovation loan does not require collateral, the interest rates against which you can borrow are also higher. In addition, most banks will offer very competitive interest rates.
It is also easier to obtain a renovation loan. The application can be submitted very quickly (also online). The proofs you must submit are easy to obtain (quotation, invoice, income, etc.)
The big winner?
Choosing between a renovation and housing loan thus appears to be highly dependent on your needs. The housing loan allows you to borrow larger amounts at more competitive interest rates, but also requires higher costs. The renovation loan is more flexible and does not require collateral or transaction costs.