Which loan should I take out to fund my renovation work?

Which loan should I take out to fund my renovation work?

Find the loan that matches your plans in KBC Touch
Find the loan that matches your plans

Option 1: renovation loan

Benefits

  • Ability to work out and apply for your loan online
  • Quick to arrange
  • No security required apart from an assignment of wages if you fail to pay
  • No notary-public required

Drawbacks

  • Often comes at a higher rate of interest than a mortgage loan
  • Online applications only possible for loans of 50,000 euros or less
 

Option 2: re-use your mortgage

You can also remortgage your current mortgage to pay for renovations. It is important to note that you need to have already paid off part of your current mortgage loan and have sufficient repayment capacity to borrow an additional amount.

How does it work?

If your home loan payments are the same each month, you pay a large portion of interest to begin with and a small portion of principal. As time progresses, the interest portion reduces and the principal portion increases. By remortgaging, you can use the released equity in your home to fund your renovations.

Benefits

  • Attractive terms
  • No new mortgage: if sufficient equity has been released, you don't need to apply for a new mortgage and you won't pay any additional notary-public's fees, just a loan origination fee
  • Tax breaks: a renovation loan is a new mortgage loan. When renovating an investment property or holiday home, the principal repayments may qualify for tax relief under a long-term savings scheme and/or the interest for standard interest relief

Drawbacks

  • If you take out a new mortgage loan, you pay a loan origination fee

Option 3: green energy loan

If your renovation work also involves investments to enhance energy efficiency or improvements to increase fire safety or protect your home against burglary, a green energy loan might be more appropriate. For this, you will need to submit invoices or proof of investment documents.

At KBC, the Green Energy & Security Loan comes at favourable terms, provided at least 50% of the renovations comprise energy-efficient investments or work that better protects your home against fire or burglary.

Some typical examples include replacing your old boiler, installing high-efficiency glazing and solar boilers, installing new roof insulation and even having energy audits done. Other examples include fitting smoke detectors and putting in fire-resistant doors, alarm systems, security cameras or access control systems for windows, doors or skylights.

Tip

With some local authorities (in Dutch) , you may be eligible for an additional energy loan. However, the terms applying to the loan may vary from one local authority to the next.

Benefits

  • Ability to work out and apply for your loan online
  • A great-value fixed interest rate
  • Can be topped up with extra grants and subsidies
  • Lower energy bills (because you have invested in energy-efficient measures)
  • A safer and more secure home

Drawbacks

  • Online applications only possible for loans of 50,000 euros or less
  • Invoice always needed as proof

Option 4: loan for home interior improvements

Whether it's a new look for the interior of your home or a total makeover, we might just have the ideal financial solution for you in the form of our ‘Home Interior Loan’.

Benefits

  • Ability to work out and apply for your loan online
  • Opportunity to spread the cost
  • Fixed repayment schedule (you know exactly how much you have to pay and for how long)
  • No invoice needed as proof

Drawbacks

  • Higher rate of interest

Option 5: garden loan

The cost of landscaping a garden can quickly add up. With this in mind, KBC has a separate garden loan to help you realise your green-fingered dreams.

Benefits

  • Tailored to your needs
  • Attractive terms
  • Ability to work out and apply for your loan online

Drawbacks

  • Invoice always needed as proof

Paying for renovations out of your own pocket

Using your own money to pay for renovation works is certainly an option, as you won't have to pay bank charges or interest. However, there are a number of drawbacks compared with borrowing. Even though you can afford to pay for the work yourself.

  • You lose some of your financial buffer
  • You miss out on income from savings and investments
  • You pass up potential tax breaks and benefits

Of course, the decision is entirely up to you. Consider the five options at your own leisure and discuss them with your loan expert.

Find the loan that matches your plans in KBC Touch
Find the loan that matches your plans
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