What is a renovation loan?
There are a lot of costs involved in renovating a home. If you prefer not to spend a large part of your savings account on renovations, then a renovation loan might be something for you. This is namely a personal installment loan that you can use to finance renovations to your home. This loan is also referred to as a refurbishment loan . With this you can, for example, renovate your kitchen or bathroom. Thanks to the renovation loan, you immediately have the necessary investment amount and then pay it back to the bank spread over time. However, the interest rates will differ between the Belgian banks. Therefore, make free use of the renovation loan simulation on our webpage to find the cheapest renovation loan that suits you best.
What loans are there for renovations?
The renovation loan has two forms. One is a personal installment loan and the other is a mortgage loan.
Personal installment loan
With the personal installment loan, everything is agreed upon when applying for the renovation loan. This means that, at the start of the renovation loan, the amount of money borrowed, the duration and the interest rate are fixed. For example, the interest rate will not vary over time. The monthly fixed due dates are also agreed upon at the start of the loan . On these days you will always have to repay part of the money borrowed and the interest on it. The first due date is one month after receiving the money. You will receive this money in full at the start of the loan.
Mortgage loans are similar to personal loans on installments, but there are still some differences. For example, with a mortgage loan you have to go to the notary, which entails notary fees. There is also a mortgage on your home, which means that in the event of default, the bank has the right to sell your home. Banks will also charge certain file costs when taking out a mortgage loan. Finally, you are also required to take out a credit balance insurance.
Which loan suits me best?
Personal installment loan
A personal installment loan is the most interesting when you want to borrow slightly smaller amounts. The advantage of the installment loan compared to the mortgage loan is that the former does not require a mortgage. This means that you do not have to pay any notary fees. Furthermore, there are no file and registration costs involved. The personal installment loan is therefore very flexible.
When renovating via a personal installment loan, you must adhere to the general terms and conditions of consumer credit. These mean that maturities are limited for certain amounts and that you may not therefore have to endlessly repay a certain sum of money. The advantage of this quick repayment is that you will soon be debt-free again.
A mortgage loan is recommended earlier if you plan to borrow large amounts. The mortgage loan involves notary fees and administration costs. You must also take out a balance insurance policy. On the other hand, the interest rate is a lot lower with a mortgage loan. So if you want to borrow larger amounts over a longer term, then a mortgage loan is more interesting than a personal installment loan.
What can I finance with a renovation loan?
In general, you can finance all renovations to your home with a renovation loan. A condition is that you must always submit the quotes or invoices thereof to your bank. A bank therefore does not provide you with a loan if you cannot submit these quotes. After all, they are not sure whether you will use the money for renovations to your home, which is a requirement for a renovation loan.
A renovation loan is therefore suitable for the renovation of your kitchen or bathroom. You can also take out a renovation loan to have a new veranda built, to have a swimming pool installed or to install an alarm system. Take a look at the simulation renovationloan from OneTopNotch and discover the cheapest renovation loan for your project.
What are the conditions for applying for a renovation loan?
The conditions for applying for a renovation loan are slightly stricter than the normal conditions that apply to taking out a loan . This is because the interest rate for a renovation loan is lower than for most personal loans. Since the renovation will lead to an increase in the value of your home, banks are more willing to offer low interest rates.
Besides the conditions to apply for a personal loan, you are here to find, there are two additional conditions to be allowed to apply for a renovation loan. The first is that you are the owner of the property for which you are applying for a loan. The second is that the amount borrowed is actually used for renovations. You must therefore be able to submit quotes and invoices when applying for a renovation loan. So you can only use the money for renovations and not for other expenses, such as a car or vacation.
Can I deduct my renovation loan from taxes?
To promote home renovations, the government allows you to deduct your renovation loan from your taxes. However, the interest on your renovation loan is only deductible if you only use the loan amount for renovations. You also have to check this every time because this can vary from year to year.
In addition, the government itself issues affordable loans if you want to renovate or renovate your home. Such a renovation loan from the Flemish government is aimed primarily at encouraging energy-friendly investments, certainly if a renovation of your house is planned. It is therefore in fact an energy loan (see further information in this article below) that is provided via the “energy houses”. FPS Finance has more and the latest information in this area.
Can I claim certain premiums?
To stimulate the renovation of buildings, the state offers all kinds of premiums for the renovation of a home. These premiums vary considerably from region to region. Provinces or municipalities also sometimes offer premiums, such as the premium for the improvement of your home, the premium for the renovation of your home, a premium for renovation work on protected monuments or a premium for energy-saving measures.
However, you must meet certain conditions before you can receive a premium. These are conditions attached to the nature of the works, your taxable income, your cadastral income and the like. For more information about these types of premiums and their application, it is best to contact your own region directly.
Is a renovation loan suitable for energy-saving renovations?
With energy-saving renovations, such as the installation of solar panels or the purchase of a solar boiler or heat pump, it is better to take out an energy loan . This is because the interest here is lower than with a renovation loan. You can also claim extra premiums for energy-saving renovations.
How do I find the cheapest renovation loan?
A renovation loan simulation can indeed help you to find the cheapest renovation loan. By comparing different banks and their interest rates and other conditions, you immediately see the price difference. The orange button at the top of this page leads you directly to this renovation loan simulator. On the left you can then enter the details, such as the amount that you expect to borrow and the term. This way you know quickly where you can take out the cheapest loan. For example, OutBank is known as a bank for its inexpensive renovation loans, but in your case it may turn out to be cheaper to compare the offer with other banks.