Increasing your mortgage for renovation

Renovating your home can greatly improve comfort and value, but it also costs money. If you prefer not to use your savings—or do not have enough set aside—increasing your current mortgage could be the ideal solution.

Below, we explain how it works, the available options, and what to consider before making a decision.

Why increase your mortgage for a renovation

Renovations—whether expanding your home, updating older spaces, or boosting energy efficiency—can enhance your comfort and significantly increase your property's value.

If you do not want to use your savings, you can finance the renovation through your mortgage.  Mortgage financing typically comes with a lower interest rate than personal loans. Additionally, if the funds are used for your main residence, the interest may often be tax deductible.

How to apply for a mortgage for renovation

When financing a renovation, you can either keep your current mortgage provider or refinance with a new one. There are three main ways to increase your mortgage:

1. Increasing your mortgage without going to the notary

If your original mortgage deed—signed at the notary when you bought your home—shows a registered amount higher than your initial loan, you may be able to increase your mortgage without needing another trip to the notary.

How it works:

• Your lender checks whether you can afford the higher monthly payments based on your income and your home’s current market value.

• You need to provide an employer’s statement and a new valuation report.

• The new portion of your loan will have today's interest rate, while your existing mortgage keeps its current rate.

2. Applying for a second mortgage

If your existing mortgage was not registered for a higher amount, you can apply for a second mortgage. This means taking out an additional loan secured by your home’s value.

How it works:

• You may stay with your current lender or choose a new one.

• Your ability to borrow depends on your income, existing mortgage, and available home equity.

• You will pay notary fees and valuation costs, as this involves signing a new mortgage deed.

• The new loan portion gets the current market interest rate, while your first mortgage remains unchanged.

If you choose a new lender, note that the interest rate or terms may differ from those of your existing mortgage.

3. Refinancing your mortgage with another provider

Another option is to refinance your entire mortgage by transferring it to a different bank. This allows you to potentially increase the total loan amount to cover your renovation costs.

How it works:

• Your entire mortgage is transferred to the new lender.

• The entire amount is subject to the new interest rate.

• You may incur additional costs, such as early repayment penalties, valuation fees, and notary fees.

Another option is to refinance your entire mortgage with a different bank. This can give you the opportunity to increase your loan amount and cover your renovation costs.

Using a building deposit

When you finance a renovation through your mortgage, the funds are typically placed in a construction deposit (bouwdepot).

How it works:

• The bouwdepot is a separate account linked to your mortgage.

• You use it to pay contractors and suppliers directly for renovation costs.

• You only pay interest on the amount you actually spend.

• The deposit is valid for up to two years. Any money left after that period will be applied to reducing your mortgage balance.

You can also use a bouwdepot to cover overdue maintenance or sustainable upgrades, such as insulation or solar panels.

Using savings for your renovation

You can, of course, choose to pay for the renovation using your own savings. This option comes with its own pros and cons:

Advantages of using savings

• You pay no interest, making it the most cost-effective choice.

• There is no need for lender approval or submitting invoices.

• You avoid notary and valuation fees.

Disadvantages of using savings

• You must have enough money saved to cover the full cost of the renovation.

• Using all your savings may leave you with little financial buffer for emergencies.

• You might earn a better return by keeping savings invested elsewhere.

Financing your renovation through your mortgage is often a smart move, but it also brings extra responsibilities. Increasing your loan adds more debt and raises your monthly payments. You also pay one-time costs such as fees for the mortgage advisor, notary, and property valuation.

Before you decide, review your full financial situation. A mortgage advisor helps you see how much you can afford to borrow, compare financing options, and choose whether it makes more sense to increase your mortgage, use your savings, or take a personal loan.

Is mortgage interest tax-deductible for renovations?

Yes — when you increase your mortgage to finance a renovation, the interest can be tax-deductible if:

• The loan is used to improve or maintain your primary residence, and

• You repay the loan within 30 years using an annuity or linear mortgage.

You normally receive this tax benefit once a year when you file your tax return.

Example: when a higher mortgage registration helps

When you buy a home, you ask the notary to register a mortgage amount slightly higher than the amount you borrow. This lets you increase your mortgage later without having to pay notary fees again.

For example, if you borrow €500,000 but register €550,000, you later apply for the extra €50,000 to finance a renovation without signing a new deed. This option keeps things simple and saves money if you plan to renovate in the future.

Whether you increase your mortgage, take a second one, or refinance with a new lender, you understand the costs, benefits, and tax rules that come with each option.

Before you decide, consult a mortgage advisor to explore your choices and calculate what works best for your situation.