Mortgage with Renovation: What Deductions and Necessary Conditions to Benefit from Them

There are excellent opportunities to renovate your home by making cost-effective choices, especially if you opt for turnkey apartment renovation. Furthermore, in recent times, the Government has made various tax bonuses available, including the Renovation Bonus, and more. We at Domidea also offer you the opportunity of Zero Interest Rate Financing for your Renovation. However, is renovation not the only expense you have planned to face? Are you thinking of buying a house to renovate? In this case, you should also consider the “mortgage plus renovation” formula. This would allow you to obtain liquidity both to purchase and to renovate your home. Various banks offer this type of financial solution, directly linked to the renovation of a property. In particular, the market offers various offers for mortgages with first home renovation. Let’s examine the topic in more detail.

The Difference between a Purchase Mortgage and a Renovation Mortgage

Purchase mortgages and renovation mortgages are two different types of financing, based on different parameters. A property purchase mortgage can provide up to 100% financial coverage for buying a house, especially if the property being purchased is a first home. To obtain the loan, you will need to inform the credit institution in question of your personal, asset, and financial situation.
The renovation mortgage, on the other hand, covers a maximum of 80% of the total financial expense. Furthermore, to access this type of financing, you need not only the ordinary personal, asset, and financial documents, but you must also provide detailed documentation regarding the work that will be carried out when undertaking the renovation of the property for which financing is requested.

What Work Can be Performed with a Renovation Mortgage

When discussing building renovation and maintenance work, a distinction must be made between different types of intervention:

• Ordinary maintenance:

This type of work includes all repair, renewal, or replacement interventions of a property’s finishes. Generally, painting, decorating, replacements, repairs, and waterproofing fall under this category.

• Extraordinary maintenance:

This definition refers to works that have an improvement or preventive purpose, such as the construction of non-load-bearing walls, replacement of fixtures and sanitary facilities, reconstruction of partitions, stairs, and more. It is essential that this type of intervention does not alter the volume of a property and its intended use.

• Major renovation works:

These are works that involve direct intervention on the structure of the property, altering its volumes and in some cases also its intended use.
All these types of interventions fall under renovation mortgages.

Who Can Apply for a Renovation Mortgage

To apply for a renovation mortgage, you must have specific eligibility characteristics:

• You must have reached the age of majority
• You must not be reported as a bad payer
• You must demonstrate that you have a payslip adequate to the requested loan, or in any case suitable financial coverage.

Documentation to Submit for a Renovation Mortgage

As already mentioned, to obtain a renovation mortgage you must submit all the ordinary documentation for mortgage evaluation, and more. You will also need the estimate from the company, or the freelance professional responsible for the work, as well as the building documentation regarding the implementation of renovation works, therefore the building project and related authorizations from the relevant Municipality and other designated entities. More specifically:

• The property’s habitability certificate
• The cadastral survey
• The property valuation
• The renovation project
• Documentation certifying the start of work
• An estimate of total renovation expenses

All this documentation will be necessary not only to account for expenses incurred, but also to estimate what the concrete increase in property value will be once the renovation work is completed.

The Advantages of a First Home Renovation Mortgage

If you buy and renovate a property as a first home, the first home renovation mortgage will offer very significant advantages. First of all, the interest rate is more convenient than that of a personal loan. Furthermore, it is possible to deduct 19% of passive interest and accessory charges on the mortgage, up to a maximum ceiling of €2,585.28. This deduction is allowed when the mortgage contract is signed by the holder of the property title, or of another real right on the housing unit. The signing must take place within six months before the start of work, or within 18 months after the start of work. The property must be used as the main residence within six months of the completion of work.

Would you like to know more? Do not hesitate to contact us, our experts will be able to provide you with all the answers you need.