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Construction depot and your mortgage

What is a construction depot

A construction depot is part of your mortgage. You can use the funds in the construction depot to pay the expenses for the construction or renovation of your home. Calculate your mortgage and construction depot amount in a few simple steps or read on to find out more about how a construction depot works. If you already have a construction depot, you can go to your 'My construction depot' page.

How a construction depot works

If you have a construction depot as part of your mortgage loan, you can use the funds from this depot to pay the expenses for your new-build property or renovation project. We explain how this works below.

Setting up a construction depot

Step 1.  Make sure you know in advance how much you want to spend on your renovation project or new-build property.
Step 2.  Calculate your maximum mortgage including renovation or new-build property.
Step 3.  Arrange an appointment with a mortgage advisor to apply for your construction depot.
Step 4.  Make the arrangements for your construction depot together with your mortgage adviser.
Step 5.  Get started with your renovation project or new-build property! Find out how you can submit expenses to be paid from your construction depot.

Useful to know about your construction depot

Before applying for a construction depot, it is good to know that we have put together some more useful information to help you make your decision.

Useful to know

  • From 1 January 2018, you can take out a mortgage including a construction depot for a maximum of 100% of your property's market value after renovation.
  • The surveyor will establish the value of your property after renovation.
  • The renovation must add value to your house.
  • Permanent fixtures such as kitchens, bathrooms or new flooring can be paid for from the construction depot, but moveable furnishings cannot.
  • Contractor or electrician’s bills can also be paid from the construction depot.
  • You can also apply for a construction depot without personal advice.
  • The construction depot term is 1.5 years.

Apply for a construction depot

When you would like to apply for a construction depot for a renovation project or a new-build property, you can arrange an appointment with a mortgage adviser to discuss your options. Simply fill in the appointment form and an adviser will get in touch with you to schedule a free orientation meeting.

More information about construction depots

We are happy to explain exactly how a construction depot works. Find out more about the rules and minimum amounts that apply for a construction depot, as well as the construction depot term.

Rules applicable to payments made from a construction depot

You can only pay expenses from your construction depot that are actually used for the construction or renovation of your home — specifically, the expenses for all 'fixed' elements of your home. These are materials which you cannot take with you if you move to another house. For example, a tiled bathroom floor can be paid for from the construction depot, but curtains cannot. 

Contractor or electrician’s bills can also be paid for from the construction depot. If you are unsure whether particular expenses can be paid from the construction depot, be sure to check this with us in advance.

What is the construction depot term?

The initial construction depot term is 1.5 years. After around 15 months, we will notify you that your construction depot is due to expire soon. You can then extend the construction depot term by 6 more months, giving a maximum term of 2 years. 

If you choose to extend your construction depot term, you will not receive any interest on the construction depot amount during the last 6 months of the loan term. You will also no longer be able to deduct mortgage interest for the construction depot amount from your taxable income.

Construction depot in 2018

Both the mortgage amount and construction depot amount you are allowed to borrow depend on a number of legal regulations. These regulations can vary from year to year. See how much you can include in your mortgage in 2018.

Construction depot in 2018

The percentage of the value of your home you are allowed to borrow has decreased. In 2017, you could finance up to 101% of the market value of your home with a mortgage loan. In 2018, this figure has decreased to 100%.

Differences between construction depots for new-build properties and renovation projects

You can arrange a construction depot when buying a new-build property or when renovating your current property. These two construction depots differ in terms of how expenses are paid and what amounts are debited.

Payments from a new-build construction depot

If you have a new house built for you or buy a new-build property, you take out a mortgage for the whole amount at the time of purchase. This amount is held in a construction depot.

You pay the builder's or contractor's bills for the new property from the construction depot in instalments. In the first instalment, you pay an amount for the land. The following instalments are then paid throughout the construction process. The final instalment is paid when your new home has been completed.

For new-build properties, ABN AMRO pays the bills directly to the builder or contractor. Supplier bills are paid to you, and you can then pay the suppliers yourself.

You receive interest on the funds in your construction depot. The interest rate is usually the same as the mortgage interest rate you have to pay on the paid amounts.

Debits for a new-build construction depot

We will debit an amount each month during the new-build construction depot term. This amount consists of repayments and/or interest.
Each month we will retrospectively deduct the interest you receive from the interest you pay. As you withdraw more money from the construction depot, the interest you receive will reduce and the monthly debit amount will increase. If the amount we debit from your depot changes, you will receive a letter in advance stating the following adjusted amount to be debited from your depot. 
Your monthly payment is €600. €525 of this is interest and €75 is the capital repayment amount. The interest you receive on your construction depot amount is €400. This means you owe us €525 - €400 = €125 interest. The amount we will debit from your depot is therefore €75 + €125 = €200. 

Claiming expenses for a renovation project construction depot

If you want to renovate your existing home but do not have enough savings, you can often include either all or part of the renovation in your mortgage. The mortgage part intended for the renovation will be held in a construction depot. You can then pay the costs of the renovation to the contractor from the construction depot either as a single lump-sum or in instalments.
For renovation project construction depots, ABN AMRO pays the expenses directly to you. You then you pay the contractor or supplier yourself.

Debits for renovation project construction depots

We will debit the full monthly payment each month during the term of the renovation project construction depot. 

Calculating your construction depot amount

In the following section, we explain the maximum loan amount for a construction  depot, the minimum amount and the difference between a mortgage with or without National Mortgage Guarantee (Nationale Hypotheek Garantie or NHG).

Maximum loan amount for a construction depot

The proportion of the renovation costs that can be included in your mortgage is primarily based on the value of your home. A surveyor establishes the value of your property after renovation.

The maximum loan amount for a construction depot  for your new-build property or renovation project depends on:

  • the mortgage you have for your current home, if any;

  • the surplus value of the current house you own, if any;

  • whether or not you are able to pay back a new or existing mortgage loan, and

  • the amount you are allowed to include in your mortgage for the renovation or new-build property.

The amount held in a construction depot

The bank sets up a construction depot to hold the loan amount required for the renovation or construction of your home.

  • If this amount is less than €7,500 and you have a mortgage without the National Mortgage Guarantee (Nationale Hypotheek Garantie or NHG), we will transfer this amount directly to you and you do not need to send us any bills. However, you should retain these bills, as the tax authorities may request to see them.

  • For an NHG-backed mortgage, the minimum construction depot amount is €2,500. If you need less than this, we will pay this part of your loan directly to you.

Example of a mortgage with a construction depot 

Say you have a mortgage of €200,000 and your home is currently worth €240,000. You want to have an extension built, which will cost €20,000. You can include this amount in your current mortgage by increasing it by €20,000. This €20,000 will then be held in a separate construction depot. 
Because your house has a surplus value of €40,000, increasing your mortgage is not a problem. We will of course assess whether this increase is affordable for you based on your financial situation.

Calculate your construction loan

To help you weigh up your options in advance, you can calculate how much you can borrow and your approximate monthly costs online. You can then make an appointment for an orientation meeting, which can take place by telephone, webcam or in one of our local branches.

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