In the latest research by The Dutch Authority for the Financial Markets (In the latest research by The Dutch Authority for the Financial Markets (AFM), more than 40 % of respondents answered that they used saving to make homes more sustainable.
Of those who recently closed on a mortgage, 20% increased their mortgage amount specifically for sustainability purposes. Respondents answered that the primary aim of sustainable changes was to reduce energy bills (83%), promote environmental sustainability (52%), or increase their home's value (49%); more than 40 % of respondents answered that they used saving to make homes more sustainable.
Of those who recently closed on a mortgage, 20% increased their mortgage amount specifically for sustainability purposes. Respondents answered that the primary aim of sustainable changes was to reduce energy bills (83%), promote environmental sustainability (52%), or increase their home's value (49%).
Making your home more sustainable is beneficial; however, financing these improvements can be daunting, especially if you have limited savings.
This blog post will provide an overview of financing options available to homeowners who want to make their homes more sustainable without draining their savings.
When you buy a home, you must visit a notary to register your mortgage. When signing a mortgage deed, you can register a higher mortgage which means that you can save on closing fees if you plan to increase your mortgage with the same lender.
Your provider determines the maximum amount you can borrow if you have registered a higher mortgage amount. To ensure that you can afford the increased monthly payments in the future, they will assess your current income and the present value of your home. You must submit an employer's statement and a new valuation report to proceed, and the application will be considered a completely new application.
Alternatively, you can apply for a second mortgage if you do not have a higher mortgage registered. The possibility of applying for a second mortgage depends on your income level, current mortgage amount, and the equity available in your home.
You are not obligated to take out a renovation mortgage with the same bank or mortgage lender. However, consider your current mortgage lender since you may be offered better terms and conditions. You may face a higher interest rate if you choose a new mortgage lender.
Approving your second mortgage requires going through the application process again and incurring additional expenses, such as valuation reports or notary fees.
When it comes to a renovation mortgage, you will use a construction account. This type of account is linked to your mortgage and serves as a savings account for renovation costs. You only pay interest on the amount you use for the renovation, which will then be added to your mortgage and paid off with your monthly mortgage payments.
The construction account holds the funds for a maximum of two years, and any remaining balance at the end of that period will be used to reduce your mortgage balance. You can close the account if you finish your renovation project before the two-year mark. Additionally, a building fund account can also be used to cover the costs of overdue maintenance.
Using your savings to renovate may be attractive because it comes with a 0% interest rate, making it the most cost-effective option.
There is no deadline or need to collect or forward invoices to the lender.
You don't need to pay anything back.
To finance the entire renovation, you must have adequate savings to cover the costs.
You may use all your savings and get at risk of investing all of your savings.
You could get a better return by saving with a high-yield account or investing your money in a brokerage account.