Renovate your new home, home construction account or personal payday loan?

Suppose you have bought a new house and you want to rebuild your house with a new bathroom or kitchen, for example. What is the best way to finance your home renovation? In this blog you can read more about the possibilities to finance your renovation.

What is a home construction account?

home loan

If you buy a new-build house or a house that still needs to be renovated, you can reserve a part for the construction or renovation when taking out the mortgage. We put this amount in a separate ‘pot’: the building fund account. From this depot you pay the bills for the renovation or new construction. You only pay interest on the part that you include in your building fund account.

Duration building deposit

The duration of a building fund account is six months or two years: six months for the renovation of an existing home and two years for the construction of a new home. During this period you can make payments from the depot for the renovation or construction of your house.

How do you finance the renovation of your house?

 How do you finance the renovation of your house?

There are several options for financing the renovation of your house. Think of savings or a donation and if that is not available or not enough, you can take out a personal payday loan or have the financing run through your mortgage.

Increase mortgage

 Increase mortgage

You can increase your mortgage if you opted for a higher registration when taking out the mortgage.

With a higher registration, a higher amount is recorded in the notarial deed than was actually borrowed for the mortgage. As a result, you may have additional spending space that may come in handy at a later stage. Whether you can increase your mortgage also depends on your personal situation such as your income, fixed costs and the possible surplus value of your house.

In this case, if you have a mortgage with a higher registration, you do not have to go to the notary again. That saves a lot of time and money. Keep in mind that your monthly payments will be higher, because with an extra loan you pay extra interest and repayment. In addition, your total mortgage may not exceed 100% of the value of your home. This is also precisely the reason that many consumers opt for a personal payday loan in addition to the mortgage in order to be able to pay other costs such as renovations or buyer costs. As a homeowner you get the lowest possible fixed loan interest.

personal payday loan

 Personal loan

With a personal payday loan it is possible to borrow an amount for a one-off expense. Such as a renovation of your house.

In principle, any desired term is possible for a personal payday loan as long as it is between 12 months and 180 months. It is wise to match the maximum duration of the loan with the loan target. In this way you prevent your loan from continuing while the economic life of the purchased product is already over.

It is also important to look at your personal situation, so that you are able to continue to meet your monthly obligations during the entire term.

With a personal payday loan you know exactly where you stand. Both the term and the interest are fixed in advance. Moreover, the interest that you pay for the loan that you use for the purchase, improvement or refurbishment of the home is tax-deductible.