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Pay attention! Borrowing money, costs money

Date: September 17, 2020
By: Ronald Gracia

Sustainable housing unaffordable or not?

Nibud recently concluded from a study with almost 38,000 participants that consumers want to make their homes more sustainable, but often not save it financially. It turns out that at least 2 million homeowners do not have enough savings on hand to take effective steps to make their homes more sustainable.

What are the exact numbers? According to Nibud , we do not die in savings in the Netherlands in order to be more sustainable.

Little savings to make it more sustainable

For example, half of the homeowners have 5000 - 10,000 us dollars to invest. Of the small 5 million owner-occupied homes (4,487,894 at the end of 2019), 2 million households would have to borrow money in order to be able to invest 5,000 us dollars. That is sufficient for cavity wall or roof insulation, solar panels , triple glazing everywhere in the house or HR ++. For larger modifications, such as making a house gas-free, it stands at 15,000 US dollars to 20,000 US dollars. The latter amount should even be borrowed by 2.5 million households.

And then there is the 'bottom' of the homeowners. More than a hundred thousand homeowners have no financial scope at all to make their homes more sustainable.

If you don't have the money, you can often borrow it. But a (mortgage) loan often turns out not to be possible for the more vulnerable households. Then making the home more sustainable becomes very difficult.

Payback time investments not yet in balance

Nibud also expresses its concerns about borrowing money to make your own home more sustainable. After all, a loan is a financial obligation for a longer period of time (around 10 years, 30 years with a mortgage) and there is little clarity as to whether the financial risks of borrowing money are in proportion to the payback period. Solar panels, for example, pay for themselves after about 6 years and only then make money. The climate agreement states that sustainable households will eventually become neutral for housing costs due to lower energy costs. However, the question is whether the climate objectives will be achieved if so few households can invest in sustainability.

Yet there are countless consumers who do want to become more sustainable, even if the investments do not pay back (quickly enough). Young people in particular are very willing not to immediately benefit from energy-saving measures for their homes.

Borrow money for sustainability? The options

Do you still want to take the step to make your own home more sustainable , but do you not have enough savings ready? Then there are two options to make it more sustainable through borrowing money.

Financing sustainability through a mortgage

Buying a house usually involves a mortgage. That is why it makes sense for many homeowners to increase their mortgage amount to make them more sustainable. Still, there are a number of drawbacks to this:

  • Your home / mortgage will be reassessed by a mortgage advisor and there are costs involved. Together with the notary fees, these consultancy and closing costs can amount to US $ 2500.
  • It is not possible for everyone to increase the mortgage.
  • Because you increase your mortgage amount, you run the risk of falling into a higher risk class, with a higher interest rate.
  • A mortgage usually has a term of 30 years. If you borrow extra, the extra amount will be included in the interest for 30 years. So you pay for 30 years (possibly higher interest) for a one-off adjustment of your home. What if you want to make a follow-up investment in sustainability after 10 years? Then you still pay interest for the last time. Demotivating and a waste of your money.

Financing sustainability through a Personal Loan

An increasingly popular alternative is a consumer credit such as a Personal Loan. This is a credit where you borrow a fixed amount for a specific purpose, with a fixed interest. This is currently a historically low, starting at 3.5%. You determine the term yourself, which is usually around 10 years. That is a lot shorter than with a mortgage, so that the final costs are often even lower than with a mortgage increase.

  • No advice and closing costs because you take out the loan yourself safely, responsibly and online.
  • Borrow a fixed amount once from 5000 us dollars, with a fixed term and fixed monthly installments. With each monthly repayment, you gradually reduce your debt.
  • Unlike with some mortgages, you may always make extra repayments without penalty.
  • The interest is currently historically low, we even use the lowest interest rate in the Netherlands. You can borrow from 3.5% with an amount of US $ 50,000.
  • The interest on a Personal Home Improvement Loan is often tax deductible.

Would you like to take steps to live sustainably? Check whether a Personal Loan is also the best option for you to make your home more sustainable. You can calculate how much you can borrow or request a quote without obligation.

Ronald Gracia

Partner and Head of Acceptance

Author: Ronald Gracia

Michel is a real all-rounder. He knows everything about credits. Whether it concerns a personal loan, a revolving credit or a combination credit for consumers, you have to go to Michel. Michel is friendly, patient and always has time for a chat or a listening ear. '

Specialization within Snaploan Online - Acceptance of applications, issuing via e-mail and My SNLO of the overviews containing the possibilities of our partner banks.

'I make sure that you can compare all options at a glance and that you can make the right choice. I think it is really important that you take out a loan that suits your needs. '

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