A home renovation usually involves a lot of costs. Banks and other financial institutions are all too well aware of this and have often included a renovation loan in their product range. A renovation loan means a loan that can be compared to an installment loan, but with a specific loan objective: the renovation of a home.
Differences with other loan forms
A renovation loan is more flexible than, for example, a mortgage and does not require notarial procedures or the provision of guarantees. In general, it will therefore be a lot easier to get a renovation loan than a mortgage. However, you will have to pay more interest on a renovation loan compared to a mortgage. To be able to pay for a renovation, you can also choose to use a mortgage. This can be done both directly with the purchase of a home and by doing a so-called re-take-up of part of your current mortgage.
In all cases you will need to be well informed in advance of all the costs that will be associated with a renovation loan. Only if you know exactly what a certain loan will cost will you be able to choose the most advantageous loan form for your renovation. Of course, you should also not forget the tax aspects of a renovation loan. In a number of cases, under certain conditions, the costs of the renovation loan are tax deductible.
Financing a renovation or refurbishment
You may only use a renovation loan to finance a renovation or renovation of your home. So you have to use the loan amount, for example, to renew your kitchen or bathroom, to repair worn-out roofing or to replace it, or to (re) construct your garden. Before you can take out a renovation loan, you must be able to submit the necessary evidence to the lender. You would therefore be well advised to request a number of quotes or bills in advance and to include these with your loan application.
Renovation loans costs and rates 2016
To find out what the most up-to-date costs and rates of a renovation loan are, you have to compare the loan products of several providers. Going blindly to the sales pitch of a single lender, however, is not advisable here because almost every loan and loan provider will claim to be the most advantageous and can lend you money on the most favorable terms.
By comparing renovation loans from multiple providers, you can be sure that you will find the cheapest loan for your personal loan goal. When you have compared different renovation loans, you can always contact the providers that seem less interesting to ask them to come up with a more attractive offer and thus surpass the cheapest loan.
When you look at the Annual Cost Percentage of the various renovation loans, you will immediately notice that there are major differences and that the mentioned interest rates are just a snapshot. The information that you have collected in this way can therefore only be used temporarily because they will constantly be subject to changes and / or will depend on the desired loan amount.
Before you finalize a renovation loan, it is wise to always request a quote with an exact calculation. If you first want to perform a simulation of a specific renovation loan, then you should preferably do so on the website of the relevant lender. The result will then not be influenced by, for example, commissions that an administrator of a website receives for recommending a particular provider or loan product.
Simulate a renovation loan
Simulate a renovation loan to find out more about the conditions and rates that apply to this loan. Because a renovation loan is in fact the same as an installment loan, the term and the loan amount will also be known in advance. By performing an (online) simulation you can therefore already know exactly where you stand and what conditions and rates you should take into account. This not only prevents disappointment, but also annoying surprises and misunderstandings afterwards.
You can already learn a lot about, for example, the interest that you have to pay on a renovation loan. After all, this will already have been determined before the signing of the loan contract and will be specified in the Annual Cost Percentage (APR). The JPK is therefore perfect for comparing multiple renovation loans and thus choosing the most advantageous. The APR consists of several components:
- the administration costs,
- loan commissions,
- possibly a life insurance policy,
- an interest component on the outstanding debt.
The current costs are a snapshot and can therefore not be displayed in a full year. Only when you request a quote or perform a simulation, you will see the most recent costs and rates. For that reason, a quotation, but also a simulation, will only be valid for a limited time. After some time, the interest rate may have risen or fallen again, as a result of which the costs and rates of a renovation loan will change. The costs and rates of a renovation loan in 2016 can therefore generally only be given globally and can only be used as a guideline .