Second mortgage: using your home equity for renovation or more
You have been living in your home for a while and have built up equity. Now you want to put that equity to work: for a renovation, an extension, a sustainability upgrade or perhaps another major expense. A second mortgage is one of the options. But when does it make sense, and when is increasing your existing mortgage the smarter move?
We calculate both options and advise you on which route best suits your situation.
Calculate your options Everything about home equity (in Dutch)
What is a second mortgage?
A second mortgage is an additional loan on top of your existing mortgage, secured against your home. You take out a new, separate loan part. That loan part is registered independently at the notary, with its own interest rate and term.
That is the key difference from a mortgage increase (in Dutch): with an increase, your current lender extends your existing mortgage. With a second mortgage, you take out an entirely new product, sometimes with a different lender.
| Second mortgage | Mortgage increase | |
| Loan part | New, separate loan part | Extension of existing mortgage |
| Interest rate | Own rate and term | Same or new rate |
| Lender | Different bank also possible | Current bank only |
| Notary | Always notary costs | Sometimes without notary (private increase) |
| Conditions | Own conditions | Conditions of current mortgage |
Which option is most advantageous depends on your current mortgage, the amount you want to borrow and the current interest rates. We compare both options for you.
When is a second mortgage worth considering?
A second mortgage is worth exploring in these situations:
- Renovation or extension: you want to finance a new kitchen, bathroom, dormer window or extension. Mortgage interest rates are lower than those on personal loans. For amounts above € 30,000, a mortgage almost always wins.
- Sustainability improvements: solar panels, heat pump, insulation. For energy-saving measures, you may borrow up to 106% of the property value instead of the standard 100%. That creates extra room.
- Your current lender does not allow an increase: a second mortgage with a different lender can then be the solution.
- Better terms elsewhere: sometimes another lender offers a better interest rate or more flexibility for the additional loan part.
For smaller amounts, roughly below € 30,000 with a short repayment term, a personal loan is sometimes more cost-effective. No notary costs, no advisory costs. But the interest rate is higher. We will calculate it for you.
What are the requirements?
To take out a second mortgage, you need to meet a number of conditions:
- Sufficient equity: your total mortgage debt after the second mortgage must not exceed 100% of the property value. For energy-saving measures, 106% is permitted.
- Sufficient income: the lender reassesses whether you can afford the higher monthly payments. The additional costs are factored into the borrowing capacity calculation.
- Valuation required: the lender needs to know what your home is worth now, and also after the renovation. You will need a valuation report.
- NHG limit applies: do you have a mortgage with Nationale Hypotheek Garantie (NHG, the Dutch mortgage guarantee scheme)? Then the total mortgage amount must not exceed the NHG limit of € 470,000. For energy-saving measures the limit is € 498,200. You pay a guarantee premium (borgtochtprovisie) of 0.4% on the new loan part.
Example calculation
Say your home is worth € 550,000 and you still have € 350,000 in mortgage debt. That gives you € 200,000 in equity. If you want to borrow € 50,000 for an extension, your total debt after the loan would be € 400,000, well below 100% of the property value. Whether a second mortgage or a mortgage increase is the smarter choice depends on your income and the conditions of your current lender. We will calculate it for you.
The funds go into a building deposit
Financing a renovation or sustainability upgrade through a second mortgage? The borrowed amount is not transferred directly to your account. It goes into a bouwdepot (building deposit): a blocked account from which you pay renovation invoices. You withdraw the money as the renovation progresses.
On the balance still held in the deposit, you receive a compensation interest. Your net interest costs are therefore often lower at the start.
What does a second mortgage cost?
In addition to the monthly interest and repayment, there are one-off costs:
Advisory costs
For taking out a second mortgage you pay advisory costs. At Libero Financieel you know exactly what you will pay upfront. View our rates.
Valuation costs
The lender has the property valued. A valuation report typically costs between € 400 and € 700.
Notary costs
A second mortgage always requires a mortgage deed at the notary. Notary costs for a mortgage deed are usually between € 500 and € 900.
NHG guarantee premium
Do you have an NHG mortgage? Then you pay a guarantee premium of 0.4% on the new loan part. In return, you benefit from the favourable NHG interest rate on this part.
The good news: advisory, valuation and notary costs are tax-deductible, as is the interest on the part you use to improve your primary residence. The condition is that you repay on an annuity or linear basis and repay the loan in full within 30 years.
Taking out a second mortgage in 5 steps
- Consultation
We discuss your situation, your renovation plans and your financial position. We calculate how much you can borrow and whether a second mortgage or a mortgage increase is the smarter route. - Valuation
We arrange a valuer who assesses your home at its current value and its expected value after the renovation. - Comparing offers
We compare offers from multiple lenders on interest rate, terms and flexibility. - Application and notary
We submit the application and arrange the notary appointment. The new loan part is registered at the Land Registry. - Building deposit opened and work begins
After signing, the amount is ready in the building deposit. You can start your renovation.
Frequently asked questions about the second mortgage
What is the difference between a second mortgage and increasing your mortgage?
With a mortgage increase, your current lender extends your existing mortgage. If the mortgage is already registered for a higher amount, you do not need to visit the notary (private increase). With a second mortgage, you take out a completely new loan part, registered separately at the notary. This can also be with a different lender. You always pay notary costs. We calculate which route is most advantageous for you.
How much can I borrow with a second mortgage?
Your total mortgage debt after the second mortgage must not exceed 100% of the property value. For energy-saving measures, 106% is permitted. The lender also reassesses your income: the additional monthly costs must fit within the borrowing capacity norms. If you have an NHG mortgage, the NHG limit of € 470,000 also applies (or € 498,200 for energy-saving measures).
Is the interest on a second mortgage tax-deductible?
Yes, but only under certain conditions. The interest is deductible if you use the money to improve or make your primary residence more sustainable, you repay on an annuity or linear basis, and you repay the loan in full within 30 years. If you use the money for something else, such as a car or holiday, the interest is not deductible. Keep your renovation invoices, as the Dutch Tax Authority may request them.
Can I take out a second mortgage with a different bank?
Yes, that is technically possible. Sometimes another lender offers a more favourable interest rate or better terms for the second loan part. Your current lender is often more straightforward in practice, but it always pays to compare. We do that for you.
How does a building deposit work with a second mortgage?
For a renovation, the borrowed amount is typically placed in a bouwdepot (building deposit): a blocked account from which you pay renovation invoices. You withdraw the money as the renovation progresses. On the balance still held in the deposit, you receive a compensation interest. Your net interest costs are therefore often lower at the start.
What are the costs of a second mortgage?
The one-off costs consist of advisory costs, valuation costs (€ 400 to € 700) and notary costs (€ 500 to € 900). If you have an NHG mortgage, you also pay a guarantee premium of 0.4% on the new loan part. Most costs are tax-deductible, provided you use the money to improve your home.
When is a personal loan better than a second mortgage?
For smaller renovations, roughly below € 30,000 with a short repayment term, a personal loan is sometimes more cost-effective. You pay no advisory or notary costs, but the interest rate is higher. Above € 30,000 or with a longer term, a mortgage wins in most cases. We calculate which option works out cheapest in your situation.
We calculate what you can borrow
Wondering whether a second mortgage, a mortgage increase or a personal loan is most advantageous for you? We calculate it free of charge and give you honest advice on the smartest route.