Personal loan for renovation can be cheaper
If you grow your house then the value of the house will go up and you will also experience more living pleasure. If you have not saved enough money to finance the renovation, you could take out a personal loan . What many people do not know is that the interest on the personal loan is tax-deductible, just as with the mortgage.
Interest tax deductible
If you want to borrow money for the renovation of your house, you can choose from several types of loans. Most people will take out a new loan within their mortgage. The reason is that the interest rate is lower than when taking out a personal loan and is tax deductible. In many cases, the choice of a new loan within the mortgage is not the best option. With a new loan within the mortgage, there are always additional costs such as consultancy, valuation and notary costs. Despite the low interest rates on the mortgage , these costs will not always be compensated. It is just how much money you will spend on the renovation. You could take out a personal loan and in many cases the interest is also tax deductible.
With the personal loan you will have to deal with a fixed interest rate and term, in contrast to the revolving credit. You pay a fixed monthly amount and despite the fact that the interest rate is higher than with a mortgage, taking out a personal loan can be cheaper for you. There are no extra costs involved.
When is the interest deductible?
The interest on the personal loan is only tax deductible if you use the loan for a renovation and the loan will pay off according to a fixed schedule. In this case you can take out a mortgage or a personal loan. The interest on a revolving credit is not tax deductible because you can always withdraw money up to your credit limit. If you want to know exactly what the tax-deductible loan is, then you should check the website of the tax authorities. So if you are going to renovate your house and you do not have extra space within your mortgage or do not want to take out an extra mortgage, the personal loan is a good option.