Renovation financing in the Netherlands

When buying a property in the Netherlands, some buyers plan to renovate or improve the home after purchase. In many cases, these costs can be included in the mortgage through a construction deposit (bouwdepot). Understanding how renovation financing works helps you plan improvements while keeping your mortgage structure clear and financially manageable.

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Construction deposits

What is a construction deposit (bouwdepot)?

A construction deposit (bouwdepot) is a portion of your mortgage that is reserved specifically for renovation or improvement costs. Instead of receiving this amount directly, the funds are held in a separate account linked to your mortgage.

The money is released as you submit invoices or receipts for approved renovation costs. This allows you to finance renovation costs as part of your mortgage, rather than paying entirely from your own savings.

Construction deposits are commonly used when purchasing older properties that require upgrades or modernisation.

Using renovation funds step by step

How a construction deposit works

After your mortgage has been finalised, the agreed renovation budget is placed in the construction deposit account.

As renovation expenses arise, you submit invoices or receipts. The lender then releases funds to pay the contractor or supplier, or reimburse you for approved costs you have already paid.

In most cases:

The construction deposit is available for a limited period, often up to two years.
Interest is charged on the full mortgage amount.
Some lenders may offer partial interest compensation on unused funds.

The exact conditions depend on the lender and your mortgage agreement.

Eligible renovation costs

What renovations can be financed through a construction deposit?

Construction deposits are typically intended for improvements that maintain or increase the value of the property. Examples of eligible costs may include:

Structural renovations.
Roof repairs or replacement.
Insulation improvements.
Kitchen or bathroom renovation.
Energy efficiency upgrades, such as insulation or heating systems.

Costs that are usually not eligible include:

Furniture and movable items.
Loose interior elements.

Eligibility may vary depending on the lender and the type of renovation.

Financing renovations when buying a home

Can renovation costs be included in your mortgage?

Renovation costs can often be included in your mortgage, provided that the total loan remains within the lender’s financing limits.

When renovation financing is included, the mortgage is typically based on the expected property value after the improvements have been completed.

A valuation report may therefore include:

The current market value of the property.
The estimated value after renovation.

This allows lenders to assess whether the total mortgage amount is supported by the future value of the property.

Planning improvements before purchasing a property

Renovation financing for older homes

Including renovation costs in your mortgage can make it easier to upgrade a property shortly after purchase. This is particularly relevant when buying older homes that require structural improvements, insulation upgrades or general modernisation. Because renovation financing affects both the mortgage amount and the valuation, it is usually arranged during the mortgage application process.

Understanding renovation financing before buying

Mortgage advice for renovation financing

Planning renovations can influence both your borrowing capacity and the long-term costs of your mortgage.

FVB de Boer is an independent mortgage advisor specialising in expat mortgages. We help you understand how renovation financing works and how a construction deposit can be included in your mortgage.

This allows you to plan your purchase and improvements with a clear financial overview.

Speak with an expat mortgage advisor

Frequently asked questions about

Renovation financing in the Netherlands

What is a construction deposit (bouwdepot)?

A construction deposit (bouwdepot) is a part of the mortgage that is reserved for renovation or improvement costs. The funds are held in a separate account by the lender and are released when you submit invoices for approved renovation work.

How long can I use a construction deposit?

Most lenders allow you to use a construction deposit (bouwdepot) for renovation or improvement work for up to two years after the mortgage is arranged. During this period you can submit renovation invoices to the lender, who pays the costs from the deposit until the funds are used or the term expires.

Can renovation costs be included in the mortgage?

Yes, renovation costs can often be included in the mortgage if the total loan remains within the lender’s financing limits and the property valuation supports the expected value after renovation. The renovation budget is usually placed in a construction deposit (bouwdepot) from which renovation expenses are paid as the work is carried out.

Do I pay interest on the construction deposit?

Yes, you usually pay mortgage interest on the full mortgage amount, including the part held in the construction deposit (bouwdepot). However, lenders often provide interest compensation on the unused portion of the deposit while the funds remain in the account, which can partially offset the interest you pay.

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