Mortgage options for renovations

How to finance home renovations?

If you are planning to renovate your home — whether it’s updating your kitchen, adding extra living space, or improving energy efficiency — there are several ways to finance it in the Netherlands. Depending on your personal and financial situation, there are a few options to consider. Each option has its own benefits in terms of interest rates, flexibility, and tax advantages.

Increasing your mortgage without going to the notary

In some cases, you can increase your existing mortgage without visiting a notary. This is possible if a higher maximum mortgage amount (also called “hypotheekinschrijving”) was already registered in your original notary deed when you first bought your home. In that case, you can borrow up to that registered limit without signing a new mortgage deed — which means you save on notary costs.

When you use this option, your current mortgage terms remain the same. You will retain your existing interest rate for the original loan, while the additional amount you borrow will be subject to the current market interest rate. This approach is a simple and cost-effective way to finance a renovation, refinance, or access home equity without going through a full notarization process.

Applying for a second mortgage

If your current notary contract (mortgage deed) does not include a higher registered amount, you can still access your home’s equity by applying for a second mortgage. A second mortgage is an additional loan secured based on the same property, in addition to your existing mortgage. Because this new mortgage needs to be registered officially, you’ll have to visit the notary again and pay notary fees for drafting and signing the new deed.

With a second mortgage, your current mortgage terms remain unchanged, including your existing interest rate and repayment plan. The newly added loan will have the current market interest rate and its own repayment conditions.

A second mortgage is often used when you need extra funds for home renovations, energy-efficient improvements, or large personal expenses. It allows you to keep your original mortgage intact while borrowing additional money at today’s rates.

Your mortgage advisor can help calculate how much you can borrow, compare lenders, and ensure that combining two mortgages remains affordable and tax-efficient for your specific situation.

Refinancing your current mortgage

Another option is to refinance your existing mortgage and switch to a different mortgage provider. This can be especially worthwhile if current interest rates are lower than when you first took out your loan or if your financial situation has changed. During the refinancing process, you can also increase the mortgage amount to cover the costs of your planned renovation.

When you refinance, your entire mortgage is transferred to the new lender, and you benefit from the current market interest rate for the full mortgage amount This can help you reduce your monthly payments, lock in a better fixed-rate period, or adjust your mortgage to better match your long-term financial goals.

Refinancing does involve some one-time costs, such as notary fees, appraisal costs, and possibly a penalty for early repayment of your existing mortgage. However, the potential savings from a lower interest rate and improved terms can often outweigh these expenses in the long run.

Am I eligible for a tax deduction when I increase my mortgage for renovation?

Yes — in most cases, the mortgage interest on a renovation loan is tax-deductible in the Netherlands, provided certain conditions are met.

You must also repay the loan within 30 years through a linear or annuity mortgage. When these conditions are met, the interest you pay on the renovation portion of your mortgage is deductible from your taxable income.

Our mortgage advisor can help you confirm whether your renovation loan meets the criteria for tax deduction and guide you through the process.

What additional fees do I have to take into account?

When applying for or increasing a mortgage, there may be general costs such as mortgage advice, a valuation report, and other administrative fees. Contact our team to understand which fees you must pay when planning the renovation.

Is it possible to finance the additional fees from the mortgage?

When you plan to finance a renovation, you will usually need a valuation report that takes your renovation plans into account. The appraiser assesses both the current market value of your home and the expected market value after the renovation has been completed. Based on these figures, the lender determines how much you can finance.

It’s important to note that, in all cases, the total mortgage amount cannot exceed 100% of the market value after renovation. This means that additional fees and renovation costs can only be financed if they fit within that limit.

What if my renovation turns out to be more expensive than expected?

When planning a renovation, it’s important to consider that the total cost may end up being higher than initially expected. It’s therefore wise to include a financial buffer to handle any unforeseen expenses. You can build this buffer into your renovation budget by adding, for example, an extra 10% to the amount you had in mind.