Renovation loans for landlords

As an owner-investor, it is crucial to maintain your property to remain competitive in the rental market. If you are considering renovating an apartment for rent or investing in a new property that still needs work , there are several financing solutions available. One of them is the renovation loan.

Information and benefits

What is a renovation loan/renovation credit?

A renovation loan is an amount of money intended to refurbish a home you own. The repayment, like a traditional loan, is made in monthly installments. Before taking out a renovation loan, it is important to review the practical information.

A renovation loan should be applied for by an owner who wants to renovate a property to turn it into a home. This property can be either rented out or occupied by the owner himself. The amount borrowed may only be used for the renovation work. To qualify, the owner must submit supporting documents to the bank. This includes a renovation plan and quotes for the planned work (from architect, contractor, materials, etc.). This allows the bank to verify that the application meets the criteria for a renovation loan.

What works can be paid for with a renovation credit?

The money from a renovation loan can generally be used for any structural or refurbishment work on the property. Some examples include:

• Installation of a fitted kitchen
• Replacement of windows and doors
• Refurbishing walls and floors
• Plumbing or electricity
• Construction of an outbuilding
• Construction of a swimming pool or terrace
• Modification of the main entrance
• Roof repair
• The truss
• Facade Cleaning

If the owner wants to take out a loan for any of these works, he can apply for a renovation loan from a bank for this purpose.

How much is a renovation loan?

The amount needed for the works varies by expenditure item. It can range from 1,300 euros to several hundred thousand euros. The owner must substantiate his project and needs to the bank. The bank agrees only if the project meets the requirements of a renovation loan and the owner has sufficient financial resources to repay the loan. As with a conventional loan, guarantees are required.

What is the interest rate of a renovation loan?

The interest rate of a renovation loan is usually lower than that of a conventional loan and can range from 3.80% to 10%. This depends on the amount and term of the loan. Banks consider the renovation of a property as an investment that increases the sale or rental value. It is advisable to carefully compare the interest rates of different Belgian banks. There are also simulators that can tell you exactly what a renovation loan will cost, depending on the term and amount. The longer the term, the more interest you will pay.

The green loan

The “green loan” is specifically for ecological works, such as double glazing, heat pumps and insulation. Its interest rate is more attractive than other forms of credit.

Tax benefits

In addition to lower interest rates, a renovation loan also offers tax advantages. This is because the Belgian government encourages the renovation of homes. A renovation loan is tax deductible if the owner meets certain conditions. The tax deduction is linked to income ceilings and a maximum renovation amount.

Comparing renovation loans

Traditional banks in Belgium offer financing solutions for renovation works. You can use renovation loan comparators to find the most advantageous solution that best suits your renovation project. Although a comparator provides a good overview, you will still need to contact the banks. The bank will investigate additional aspects, such as age, financial situation and banking history. An advisor can best inform you about the most interesting solutions.

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Source reference:

[1] Banking and Credit Institutions (Major Belgian Banks). Product Guide: Terms and Interest Rates of Mortgage and Green Renovation Loans. [2] Federal Public Service Finance. Tax Deductibility of Renovation Loan Interest Charges and the Impact on Cadastral Income. [3] Academic Research (Real Estate Economics). Financing Structure Analysis: The Optimal Balance between Equity Contribution and Loan for Rental Yield. [4] Flemish, Walloon or Brussels Energy Agency. Information about the “Energy Loan” or “Green Loan” Facilities (for example, the My Rebuilding Loan in Flanders). [5] Royal Federation of Belgian Notaries (notaris.be). The Legal Procedure of a Mortgage Loan and the Compulsory Deeds. [6] Deloitte or PwC (Belgium). Tax Optimization: The Use of Loans for Real Estate in Partnership (VOF, BV) versus Private. [7] Real Estate Sector Report. Market Analysis of Rental Value Increase and Payback Period of the Energy Renovation Loan. [8] Construction Industry Federation (e.g., Construction Confederation). Cost Estimates and Quotes: The Required Documentation for the Application for a Loan. [9] European Regional Development Fund (ERDF). The Role of European Funds in Stimulating Sustainable Renovation Credits. [10] Legal Advice. The Legal Consequences of Providing Collateral for the Loan (Mortgage or Pledge). [11] Agency Wonen in Flanders (and regional counterparts). Information on the Terms and Conditions of Grants and Premiums in Combination with a Loan.

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