Renovation and sustainability

Anyone who buys or already owns a home may at some point want to renovate or improve energy efficiency. These costs can be covered by personal savings, but it is also possible to increase the mortgage or take out a separate loan. Which route suits best depends on the scale of the plans, the property value and the current mortgage situation.

What is a renovation depot?

A renovation depot is an amount included in the mortgage and deposited separately in a blocked account. During the renovation, invoices from contractors and suppliers are paid out through the depot. The balance in the depot typically earns a temporarily lower interest rate. Once the depot has been fully used or the renovation is complete, the remaining balance is settled against the mortgage.

How much may the mortgage increase for renovation?

When a mortgage is increased, lenders reassess the ratio between the borrowed amount and the property value after renovation. The new value is determined through a property valuation. The maximum mortgage is generally capped at a percentage of that new value. Whether income can support the additional costs is also reassessed.

Energy improvements as an investment

Energy-saving measures such as insulation, solar panels, heat pumps or triple-glazing structurally reduce energy bills. Lenders and the government encourage energy improvements. For instance, the NHG threshold for properties with a favourable energy label or for energy-saving renovations is sometimes higher than for a regular purchase. Some lenders also offer a rate discount on the mortgage for a high energy label.

Green mortgage

A green mortgage (energiehypotheek) is a variant in which the additional borrowing is earmarked for energy-saving measures. The extra amount is typically capped by regulation. The advantage is that energy improvements can be partially financed on top of the standard mortgage, without requiring the full investment from personal funds upfront. An advisor can calculate whether this is advantageous in your situation.

What does an advisor assess?

For renovation or energy improvement plans, an advisor looks at total borrowing capacity, the expected added value of the renovation, the substantiation of costs and the affordability of the new monthly payments. A detailed quote from the contractor or installer helps to determine the depot amount correctly.

Disclaimer

This is general information, not personal mortgage advice. Standards and limits for renovation depots and green mortgages may differ per lender and are subject to change. A Wft-certified advisor will assess your specific situation.