Buying a property that needs renovation is an opportunity to get a home below market price and customize it to your taste. The renovation mortgage allows you to finance both the purchase of the property and the cost of the works in a single loan, simplifying the entire process.
How does a renovation mortgage work?
Unlike taking out two separate loans (a mortgage and a personal loan for the works), the renovation mortgage combines both into one. The bank finances the purchase price plus a percentage of the renovation cost, under conventional mortgage conditions.
The capital allocated for the renovation can be released in two ways depending on the bank:
- In a lump sum at the start of the works.
- In phases according to renovation progress, with prior certification by a technician.
What do banks look at?
To approve a renovation mortgage, banks analyze:
- Post-renovation valuation — The bank values the property based on its worth once renovated. This determines the maximum amount to finance.
- Detailed works budget — A budget signed by a professional detailing the scope and cost of the renovation is required.
- Debt capacity — The total monthly payment must not exceed 35% of net monthly income.
- Job stability — Permanent contract or established self-employment with demonstrable income.
- Available savings — Minimum 20% of total value (purchase + renovation) plus purchase costs (6-15% depending on region).
- Credit history — No defaults or outstanding debts.
What types of renovations can be financed?
- Full property renovation
- Installations (electrical, plumbing, gas)
- Kitchen and bathroom renovation
- Window and door replacement
- Thermal and acoustic insulation
- Aerothermal or solar panel installation
- Accessibility adaptation for reduced mobility
- Space expansion
When is a renovation mortgage the right choice?
It's the ideal option when:
- You find a well-priced property that needs updating.
- You want to fully customize your new home.
- The total cost (purchase + renovation) is less than the price of an already renovated property in the area.
- You prefer a single loan with mortgage conditions instead of combining a mortgage and personal loan.
What documentation do you need?
- Valid ID/NIE
- Last 3 payslips or income declaration
- Income tax return for the last 2 years
- Bank statements for the last 6 months
- Property registry note of the property to buy
- Signed detailed renovation budget
- Deposit contract if already signed
- Technical project if the renovation is structural
The Duplo Capital advantage
The renovation mortgage is a product that not all banks offer and requires specific negotiation. Duplo Capital knows exactly which banks finance this type of operation and gets the best conditions for your project.
Frequently asked questions about purchase and renovation mortgages
Yes, a purchase and renovation mortgage lets you finance both the property and the cost of the works in a single loan. Instead of combining a mortgage with a personal loan for the works, everything is grouped under the terms of a standard mortgage. Not all banks offer this product, and it requires specific negotiation. Duplo Capital knows which lenders finance purchase plus renovation and on what terms.
The bank finances the purchase price plus a percentage of the renovation cost, which varies by lender. The maximum amount is calculated on the appraised value the property will have once renovated. As a guide, you will need to contribute at least 20% of the total value (purchase plus renovation), plus the purchase costs, which range from 6% to 15% depending on the autonomous community. The final amount depends on your profile and your borrowing capacity.
It depends on the bank: the renovation money is released either in one go at the start of the works or in stages as they progress. When it is paid in stages, each drawdown requires prior certification by a technician confirming the progress of the works. The release method is set in the mortgage terms. It is worth knowing it before signing so you can plan payments to your contractors.
Anything from a full renovation to specific improvements can be financed. These include upgrading electrical, plumbing or gas installations, renovating the kitchen and bathrooms, replacing windows and doors, or thermal and acoustic insulation. Installing aerothermal heat pumps or solar panels, adapting the home for people with reduced mobility and extending the living space are also eligible. If the renovation is structural, the bank will also ask for a technical project.
Besides the usual personal documents, you will need a detailed renovation budget signed by a professional. On the personal side, you will be asked for a valid DNI or NIE, your last 3 payslips or your tax return, your IRPF tax returns for the last 2 years and bank statements for the last 6 months. For the property, the land registry extract (nota simple) and the deposit contract (arras) if already signed. If the renovation is structural, a technical project will also be required.
In many cases a renovation mortgage is more practical, because it combines the purchase and the works in a single loan on mortgage terms. This avoids managing two separate loans with different terms and conditions. It usually makes sense when the total cost, purchase plus renovation, is lower than the price of an already renovated home in the area. Whether it suits you depends on your profile, the cost of the works and the terms each bank offers.
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