We Belgians all dream of having our little nest. Once this dream comes true, we embark on renovations. Reality sometimes turns out to be a little different from the dream. Your house needs better insulation, the bathroom is too small, the kitchen is getting old or it is time to replace the frames, the time has come to renovate your home. But how do you calculate the cost of the operation and which loan allows you to finance these renovations?
Did you say renovation? First of all, define your budget!
How much will your renovation or transformation work cost you? It obviously depends on the initial situation and the changes you want to make. Is it demolition or painting? In this case, you can consider carrying out part of the work yourself. Remember that a professional will get the job done faster, of course.
So be sure to properly assess their costs before embarking on these renovations or alterations. And don’t forget that in most renovation projects, the budget originally planned is quickly exceeded. Do not hesitate to provide an additional margin of 5 to 10% . This will avoid unpleasant surprises. Also note that if your house is more than 10 years old, you pay less VAT on the cost of the renovation work.
If you want to finance your renovations (in whole or in part) via a loan, you have different options: first, the renovation loan , but you can also borrow part of your mortgage, or even take out a new one. Each option has its advantages and disadvantages, it is up to you, with the help of your bank, to choose the solution that suits you best. The information below will likely help you make a decision.
Why choose a renovation loan?
The renovation loan is an installment loan, its interest rate is therefore less attractive than that of a mortgage. On the other hand, you have no additional costs to pay , because you do not have to hire a notary. The collateral requirements are also less stringent than with a mortgage, and you usually have the funds borrowed faster .
The installment loan is generally particularly attractive when the amounts involved are small and you want to repay over a short period .
There are two types of installment loan for renovation works: a loan for conventional works and a green loan which allows you to finance renovation works (mainly) intended to reduce your energy consumption. With the green loan, you generally benefit from a more advantageous interest rate.
To get an idea of what your home improvement loan could represent, you can already calculate the amount to be reimbursed each month: make a simulation of your renovation loan. You’ll know exactly what to expect.
Finance your renovation work via a mortgage: interesting or not?
To buy or have your house built, you most likely took out a mortgage. If you have repaid it for a few years already, you can consider borrowing part of the capital repaid in order to finance your renovation work. You just need to determine the new conditions (such as duration) with your bank agent. No need to go back to the notary for this, the cost of the operation is therefore limited to the application fees.
Financing your transformation or renovation projects in this way has some obvious advantages. You benefit from the lower interest rate on mortgages and you can spread your repayment over a longer period . Your monthly payments are therefore lower.
You can also possibly apply for a new housing loan to finance your renovations. Disadvantage: in this case, you must, in addition to the administrative fees, again pay notary fees for an additional guarantee and you risk waiting a certain time before being able to dispose of the funds.