Renovation mortgage A renovation always costs money. Often a lot of money. Whether it's a new kitchen, an extension, a dormer window or a new bathroom - the dollars are flying out the door. Something like this is by no means always paid for from own resources. Borrowing money for a renovation is quite logical: the renovation increases the value of the house. And do not forget the living pleasure! Taking out a loan to finance the renovation is therefore very common.
Borrow money for renovation You can borrow money for a renovation in different ways:
Renovation mortgage The renovation mortgage does not appear in the above list. This is therefore not a specific mortgage type. The term renovation mortgage usually refers to a second mortgage that is taken out to finance a renovation. But it can also be a mortgage increase. From the existing mortgage, or by refinancing. A renovation mortgage is therefore not a type of mortgage. It is a spending purpose of a mortgage loan.
Renovation with a personal loan Financing a renovation does not necessarily have to be done with a mortgage. In some situations it is more beneficial to opt for a personal loan . When taking out a personal loan you will not have to deal with costs for advice, appraisal and notary. It is therefore cheaper than adjusting or refinancing the mortgage. On the other hand, the interest on a personal loan is higher than the mortgage interest .
Tax deduction for renovation The interest you pay on your renovation loan may be tax deductible . Whether it concerns a mortgage or a personal loan. If the borrowed money is used for the owner-occupied home, the loan qualifies for interest deduction. For this, the loan must also meet other conditions. The most important: repayments must be made according to a fixed schedule. An annuity mortgage, a linear mortgage and a personal loan meet this condition. So even if you opt for a personal loan for your renovation, the interest is tax deductible.