Mortgage for renovation — how it works
Want to renovate your existing property or buy and renovate? Banks have specific products for this. The basic principle: they pay out money in installments tied to renovation milestones.
Two scenarios: own property vs. property to buy
You already own the property: renovation mortgage on existing property. Bank lends up to 80 % of post-renovation appraised value, minus existing mortgage.
Buying + renovating: regular purchase mortgage + add-on for renovation. Often combined into one product.
How payouts work
Bank doesn't give you the full amount upfront. You get it in 3–5 installments tied to renovation milestones:
- 15–20 % at start (deposit, demolition, materials)
- 30–40 % after rough construction (utilities, plastering)
- 20–30 % after finishing (floors, fixtures)
- 10–15 % after final inspection
Each installment requires submission of invoices and bank inspection.
What banks finance
- Yes: kitchen, bathroom, floors, windows, heating, electrical
- Yes: structural work, roof, insulation
- Conditional: furniture (if built-in only), kitchen appliances (built-in only)
- No: moveable furniture, electronics, decorations, garden landscaping
Documents needed
- Renovation budget with detailed breakdown
- Quotes from contractors (or DIY plan with material costs)
- Building permit (if applicable)
- Pre- and post-renovation appraisal
Without proper documentation, bank won't release funds.
FAQ
How long do I have to complete renovation?
Typically 12–24 months from drawdown of first installment. Extension possible with bank approval.
Can I do the work myself instead of hiring contractors?
DIY is allowed, but bank still wants to see material invoices and progress inspections. Labor cost can't be claimed (you can't pay yourself).
What if the renovation costs more than budgeted?
You cover the overrun from your own funds, or apply for additional loan (rarely approved mid-renovation). Get multiple quotes upfront and add 15 % buffer.