Renovating can be worth more than moving. But the wrong loan turns a new kitchen into a ten-year instalment. The two options, a worked example and the plan that comes before the loan.
Renovating can be worth more than moving
Moving home costs IMT, stamp duty, the deed, agent fees and a new mortgage. Renovating the home you already live in avoids almost all of that. A kitchen, a bathroom or new windows change your day to day and often add value to the property.
The common mistake is to start with the loan and only then with the budget. It should be the other way round.
The two types of loan
- Personal loan for renovations: no mortgage, fast approval, term up to 7 years, maximum APRC of 15.3% in the 3rd quarter of 2026. Makes sense for works up to about €20,000 or €25,000.
- Mortgage-backed loan for renovations: secured on the home (or an increase to your existing mortgage), rate close to a mortgage rate, long term, more paperwork and valuation and registration costs. Makes sense for big projects or when the home is already paid off.
A worked example
- Personal loan at a 10% APRC over 5 years: about €425 a month, €25,500 in total.
- The same over 7 years: about €332 a month, €27,900 in total. Less per month, €2,400 more at the end.
- If the works are about energy efficiency (windows, insulation, solar panels, heat pump), the "energy transition" purpose has a maximum APRC of 8.9%. It pays to declare the purpose correctly.
Make the plan before the loan
- Three written quotes, with materials and deadlines.
- A 10 to 15% buffer for surprises. They always show up.
- Permits or prior notice to the council if you touch structure, façade or utilities.
- A payment schedule for the contractor aligned with the loan drawdown.
- Keep the invoices: improvement works with an invoice count towards reducing capital gains if you ever sell.
Works, capital gains and IMI: what changes over time
Improvement works with an invoice (not routine maintenance) are added to the purchase cost when you one day sell the home, and reduce the capital gain subject to income tax. Keep the invoices from the last 12 years, with the property's tax number. The capital gains calculator shows you the effect.
IMI does not change because of the works themselves, but it can change if you request, or there is, a revaluation of the taxable value. If you turn a home with a poor energy rating into class A or B, some municipalities give an IMI reduction: ask your council before deciding.
How to choose between the two
Rule of thumb: works up to €25,000 and the ability to repay in 5 years, personal loan. Bigger projects, a home with plenty of mortgage headroom or the wish to spread the instalment over 15 or 20 years, mortgage-backed. In both cases, compare by APRC and total amount payable, and factor in the fixed costs of the mortgage-backed option (valuation, registration, 0.6% stamp duty).
Frequently asked questions
Can I ask for an increase to my mortgage for renovations?
Many banks allow it, with a new valuation and a new assessment. The rate usually follows the mortgage rate, but there are process costs. Compare with a personal loan before deciding.
Do renovations lower IMI?
Not directly. They may change the taxable property value if there is a revaluation. What can change is the value of the property and future capital gains, if you keep the invoices.
Does the Guru handle renovation loans?
Yes, in both versions, through the partner banks and at no cost to you.