Construction deposit (bouwdepot): what is it and how does it work? | Libero Financieel
You have found a property that still needs renovating. Or you are buying a newly built home that will be completed in stages. In both cases, you need money available at the moments invoices come in. That is exactly what a construction deposit (bouwdepot) is for.
A construction deposit is a separate account linked to your mortgage. The lender places the borrowed amount for your renovation or new build into this account. From the deposit, you pay the invoices of contractors and suppliers. You stay in control of the costs at all times, while the lender is assured that the money is actually spent on the property.
Want to know how much construction deposit you can get and how to use it smartly? We are happy to help.
When do you need a construction deposit?
A construction deposit is intended for situations where you borrow money to build, renovate or make your home more sustainable. The three most common situations:
- New build (nieuwbouwwoning): you are buying a home that is still under construction. The contractor sends instalment invoices at fixed construction milestones. The deposit pays those invoices automatically.
- Renovating an existing home: you are buying a property that needs work and want to renovate it. Think of an extension, dormer window, new kitchen or bathroom. You pay the invoices yourself from the deposit.
- Making your home more sustainable: you want to finance solar panels, insulation or a heat pump through your mortgage. The construction deposit makes this possible, even when increasing an existing mortgage.
In some cases, a construction deposit is mandatory. Has a valuer assessed the value of your home after renovation? Then the lender requires the renovation funds to remain in the deposit until the work is complete.
How does a construction deposit work?
The principle is straightforward. When you take out your mortgage, you agree with your mortgage adviser on how much goes into the construction deposit. That amount is placed into a blocked account at the notary signing (notarispassering). From that point, this is how it works:
- Receive an invoice
You receive a bill from your contractor or supplier for work completed or materials delivered. - Submit the invoice to the lender
You submit the invoice via the lender's app or online portal. Sometimes you pay upfront and claim the amount back; in other cases the bank pays the contractor directly. - Payment processed
The bank checks the invoice and transfers the amount. Costs are paid step by step and the deposit gradually empties. - Deposit closes
Is the renovation complete or has the term expired? The remaining balance is then deducted from your mortgage. You never carry more debt than necessary.
What does a construction deposit cost? How the interest works
The interest on your construction deposit works differently from a regular account. You pay mortgage interest on the full amount borrowed, including the part still sitting in the deposit. However, on the amount not yet withdrawn from the deposit, you receive an interest compensation. At most lenders, this compensation equals the mortgage interest rate you pay.
That means: as long as the deposit is full, your monthly costs stay low. You pay interest, but receive an equal amount of interest compensation at the same time. As you withdraw more from the deposit, your net monthly costs increase.
Practical example: suppose you have a construction deposit of € 40,000 at 4% interest. You pay € 1,600 per year in interest. As long as the deposit is full, you also receive € 1,600 in interest compensation. Your net cost is zero. Once you have withdrawn € 20,000, you receive only €800 back and pay a net € 800 per year in interest.
Good to know: the interest you pay on the withdrawn amount is tax-deductible (hypotheekrenteaftrek), provided your mortgage meets the repayment requirement (annuity or linear repayment).
How much construction deposit can you get?
The maximum amount depends on two things: the value of your home after renovation and the type of renovation you are planning. The general rule is: you can borrow up to 100% of the market value after renovation. For energy-saving measures, you can even borrow up to 106%.
Renovations that are well-financeable
- Extension or annex (uitbouw)
- Dormer window (dakkapel)
- Solar panels and insulation
- Heat pump or central heating system
- Complete new build
These renovations demonstrably increase the value of your home. A valuer can then set a higher post-renovation market value, which means you can borrow more.
Renovations with lower financeability
- Luxury kitchen or bathroom
- New flooring or paintwork
- Garden or outdoor space
- Interior and furniture
These improvements hold their value less well. A valuer will assess them critically. You can generally finance little or none of these through the construction deposit.
Want to know exactly how much you can borrow for your specific renovation? We will work it out for you.
How long does a construction deposit last?
The duration of your construction deposit depends on the lender and the type of renovation:
- Renovation of an existing home: usually 1 to 1.5 years, sometimes extendable by 6 months.
- New build: standard 2 years, extendable once by 1 year at most lenders, up to a maximum of 3 years.
- Sustainability improvements: terms vary, but are generally shorter as the work is completed more quickly.
Plan your renovation or build realistically. The deposit starts running from the moment you sign at the notary, even if you have not yet begun renovating. Make sure your contractor finishes on time and that you submit invoices promptly.
Construction deposit tips: what is and is not allowed
Many people look for smart ways to get the most out of their construction deposit. That is sensible. Just make sure you know the rules.
What can you claim?
- Labour hours from contractors and installers
- Building materials fixed to the property (tiles, pipes, central heating system)
- Built-in kitchen appliances
- Fixed wooden flooring (parquet, resin floor)
- Architect and engineering fees directly related to the renovation
What is not allowed?
- Movable items you take with you when you move (loose furniture, freestanding appliances)
- Garden furniture or decoration
- Costs unrelated to the property
Always keep all invoices. The lender can check whether the money was genuinely used for the construction or renovation. The Dutch tax authority (Belastingdienst) may also verify this in the context of mortgage interest deduction.
How do you apply for a construction deposit?
You do not apply for a construction deposit separately: it is part of your mortgage application. Together with your mortgage adviser, you determine how much of your mortgage goes into the deposit. Here are the steps:
- Draw up a renovation specification
Prepare a detailed budget for the work. The more specific, the better. The lender needs to know what the money will be used for. - Request a valuation
A valuer determines the market value of your home after renovation. This report partly determines how much you can borrow. - Submit the mortgage application
Your adviser submits the application to the lender, who assesses it and sets the deposit amount. - Notary signing (notarispassering)
The mortgage deed is signed at the notary. The deposit amount is placed into the blocked account and the term begins. - Pay for the renovation
Submit invoices and pay your contractor from the deposit. Keep a close eye on the remaining term.
Personal advice on your construction deposit
A construction deposit sounds technical, but the core is simple: you want to renovate, and we make sure the financing is right. We look at what you want to achieve, what the valuer establishes, and which lender offers the best terms for your situation.
At Libero Financieel, we are 100% independent. We do not go for the most convenient bank, but for the mortgage that fits you best. Now and in the future.
- Advice on the size and duration of the deposit
- Comparison of lenders on construction deposit terms
- Support with the renovation specification and valuation
- Guidance from application to notary signing
- Available for questions throughout the renovation
Frequently asked questions about the construction deposit
What is a construction deposit (bouwdepot)?
A construction deposit (bouwdepot) is a separate, blocked account linked to your mortgage. The lender deposits the borrowed amount for your renovation or new build into this account. From the deposit, you pay the invoices for construction, renovation or sustainability work on your home. This gives the lender certainty that the borrowed money is actually spent on the property.
How does a construction deposit work for an existing home?
When renovating an existing home, you submit invoices to the lender. You can pay the invoice yourself and claim the amount back, or the lender pays the contractor directly. You can only claim costs for building materials and labour that are fixed to the property. The term is usually 1 to 1.5 years.
How much construction deposit can I get?
You can borrow up to 100% of the market value of your home after renovation. For energy-saving measures, this is even 106%. A valuer determines the post-renovation value in advance. Renovations that demonstrably increase the value of your home, such as an extension or dormer window, are more easily financed than cosmetic improvements like a new bathroom or kitchen.
What does a construction deposit cost per month?
As long as the construction deposit is full, you pay mortgage interest on the borrowed amount but receive an interest compensation on the undrawn portion that is usually equally high. Your net cost is therefore zero. As you withdraw money, your net monthly costs increase: you no longer receive compensation on the withdrawn portion, but you do continue to pay interest on it.
Can I also use a construction deposit for sustainability improvements?
Yes. A construction deposit is also available for making your home more sustainable, for example for solar panels, insulation or a heat pump. More generous lending standards apply to energy-saving measures: you can borrow up to 106% of the property value. Want to improve sustainability through your existing mortgage? In many cases this is possible via a mortgage increase with a construction deposit. Find out more on our page about sustainable living.
What happens if money is left over in the construction deposit?
If the renovation is complete and there is still money in the deposit, that amount is automatically deducted from your mortgage. Your debt decreases as a result. In some cases you can have the remaining balance paid out to your own account, but this requires a new income assessment. Always check this with your lender.
How do I apply for a construction deposit?
You apply for a construction deposit as part of your mortgage application. Together with your mortgage adviser, you draw up a renovation specification, have the property valued at its post-renovation worth, and submit the application to the lender. At the notary signing, the amount is placed into the blocked account and the deposit term begins.
More about renovating and sustainability
A construction deposit is part of a bigger picture. Read more about related topics: