Make Your Home Equity Work for You

• ProviderRate %
• ABN AMRO 3.45%
• Rabobank 3.69%
• ING 3.60%
• ASN Bank 3.38%
• Lloyds Bank 3.25%

How does utilizing your home equity work?

When your home’s value increases beyond your remaining mortgage balance, you have home equity. You can unlock this “paper profit” in several ways:

The Expertise of Mortgage Center: We calculate exactly how much equity you can safely withdraw and which financing option best suits your goals. This ensures you can enjoy an upgraded home while keeping your monthly payments within budget.

Renovations or Sustainability: You can increase your current mortgage or take out a second mortgage to invest in home improvements and lower energy bills.

Major Purchases: In many cases, you can use your equity for other significant expenses, such as a new car or a second property.

Lower Interest Rates (LTV): Because your home value has risen, your Loan-to-Value (LTV) ratio has improved. This may move you into a lower risk category, potentially qualifying you for a lower interest rate.

Determine your goal

Every goal comes with its own set of tax rules. We provide expert advice on tax deductibility (interest relief) and the impact on your monthly payments, ensuring your plans remain financially solid.

Appraisal report

1. Determining the value of your home (Valuation) To determine how much extra you can borrow, the current market value of your home must be officially established. This almost always requires a new valuation report. Based on this report, the bank verifies whether there is indeed sufficient equity relative to your current loan.

In some situations, a desktop valuation may be used. You can request this report yourself via www.calcasa.nl. This report is significantly cheaper than a standard valuation report. Together, we will determine if a Calcasa report is permitted in your specific situation.

2. Finalizing your renovation plans Are you using the extra loan for a renovation? If so, the bank will want to know exactly which improvements you intend to make beforehand—for example, a new kitchen, a dormer window, or insulation.

3. The renovation specification You will record all your plans on a specific form: the renovation specification (verbouwspecificatie). This is a detailed overview of the planned work and the expected costs per item.

4. Value before and after renovation The appraiser who visits your home will determine two values:

• The current market value: What is the house worth right now?
• The market value after renovation: What is the expected value once the plans on your renovation specification have been completed?

5. Maximum loan based on future value The major advantage of a renovation is that the bank often bases the maximum height of your new mortgage on the market value after renovation. This often allows you to finance more than you might expect based on the current value alone.

Tip from Mortgagecenter: The extra amount borrowed for the renovation is deposited by the bank into a construction depot (bouwdepot). From this fund, you can directly pay invoices from the contractor or the hardware store.

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Consumer spending / Consumption

With a personal equity withdrawal (consumptive loan), you use the surplus value of your home for private purposes. Once the notary has finalized the paperwork, the funds are deposited directly into your bank account.

The bank applies strict criteria for this: they will carefully check both your income and your home’s value. Often, there is a limit of 50% of the home value for interest-only loan components.

Important considerations:

• Tax: Because the money is not being used to improve your home, the interest on this extra part of your loan is not tax-deductible.
• Budget: While this option offers financial freedom for large purchases, it is essential to ensure the extra monthly payments fit comfortably within your budget.

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Mortgage application

Although the process is similar to a regular application, the focus here is on proving your home’s equity through a valuation report and, if applicable, a renovation specification. The bank will re-assess your income and the property value to ensure the increase fits within current lending standards.

After approval and signing the offer, a visit to the notary usually follows to officially record the increased loan. Finally, the funds for a renovation are placed in a construction depot, or, in the case of personal use, transferred directly to your bank account..

To visit the notary or not?

If you opted for a higher registration (verhoogde inschrijving) when you first bought your home, you can often increase your loan “privately” without involving a notary. This saves you significant notary fees, as the bank can simply add the extra loan to the existing deed.

However, if the requested increase exceeds the original registration amount, you must visit the notary for a new mortgage deed. Regardless of whether a notary is required, costs for the valuation and financial advice usually still apply.

Construction deposit / Renovation account

The main difference between a construction depot (bouwdepot) and a direct payout lies in the oversight and the purpose of the funds. The bank wants to be certain that the loan is being used for its intended purpose.

1. Construction Depot (For Renovations) When you borrow for home improvements, the money is held in a dedicated account. The bank only releases funds when you submit invoices for the work performed.

2. Direct Payout (For Personal Use) Are you using the home equity for things unrelated to your property—such as a car, a camper, or a trip around the world? In that case, no verification of invoices is required. The funds are transferred directly to your personal bank account.