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Interest subsidized vs. market renovation loan? So choose!

The three percent interest-subsidized home renovation loan started in Hungary in early February. The construction, with a term of up to HUF 6 million and a maximum term of 10 years, is used to pre-finance renovations. In any case, the banks have already offered a number of constructions for renovation and modernization. It’s Judit Fancsali From one to two writing the author of a blog.

It’s worth thinking carefully about exactly what budget is available for the work and what would be best worth it. Our financial expert, Judit Fancsali, is From one to two The author of the blog looked at who should apply for a new interest-subsidized renovation loan and when it is more worthwhile to choose other renovation loans found as a product of many banks.

Another state subsidy: renovation loan with interest discount

Recently introduced or modified family support measures At the beginning of February, the government launched another subsidy: with a maximum term of ten years and a mortgage-based interest rate of 3%, it launched an interest-subsidized renovation loan to advance the costs of renovations with state support of up to HUF 3 million. The Hungarian State Treasury has most questions about the construction website or directly interested in them we can get an answer. In any case, Erste Bank, Gránit Bank, CIB Bank, MKB, Budapest Bank, K&H, OTP Bank, Raiffeisen Bank and Takarékbank are already in their portfolios and may soon be introduced by new financial institutions.

However, before we get lost in the details, conditions, and scope of supported renovation activities, we thought it worthwhile to compare the new design with renovation and modernization loans on the market, as many financial institutions already have loan products to support such efforts by families and individuals. In addition to renovation and modernization loans, banks can also use a personal loan for this purpose: if someone only needs a few million forints and / or does not want to register a mortgage on their property, for example, this door is also open.

For the sake of transparency, the main differences are summarized in the table below:

When is it worth applying for an interest-subsidized loan?

A state-sponsored, newer construction can come in handy in certain life situations and family backgrounds, but it’s especially worth cutting into if someone

  • it provides security that the bank checks eligibility both at the beginning and when applying for a loan
  • fixed interest rate is important: with a 10-year maturity, the three percent interest rate is better than the interest rate schemes available on the market
  • The prepayment can be included in the scheme: the prepayment of HUF 3 million is free of charge, while in the case of prepayment from other sources and other bank renovation loans, the prepayment of the subsidy can be made even with the 1-2% fee of the prepaid amount (10- HUF 20,000)

When should you choose a market loan?

In any case, the subsidized loan does not provide a good solution for many life situations, family budgets and backgrounds, its framework is relatively narrow, so we do not recommend it if

  • the borrower needs more than HUF 6 million,
  • one of the application conditions will only be met by the end of the renovation work (for example, one year of permanent residence)
  • The goal is a term longer than 10 years
  • additional debtor involvement is required for creditworthiness
  • the borrower does not want to settle accounts with the bank, as in the case of existing renovation loans it is necessary to certify the works with a maximum of another valuation
  • the borrower does not want to take the risk of finding out after receiving the loan and then at the end of the work whether he will receive the aid, as in this case the interest-subsidized loan becomes a market loan
  • the borrower does not want a higher administrative burden: this is also higher for an interest-subsidized loan, as, among other things, a certificate of public debt exemption, a certificate of legal status, a certificate relating to the child (ren) must be submitted.

And then let’s look at the details of the interest-subsidized renovation loan!

Quantitatively, in the case of an interest-subsidized loan, the approximate amount of the expected installments is as follows (the initial costs are not yet accurate because the bank offers are still being formed):

The borrower must prove to the credit institution that the activities carried out using the loan have been carried out by presenting the invoices or a copy thereof to the credit institution within one year of the disbursement of the loan. Invoices certifying the renovation, with 0 and / or 27% VAT content, can be collected from January 1, 2021, until December 31, 2022, but in case of borrowing, a maximum of 1 year is available.

And if this is not met, or if someone else loses their entitlement to the renovation grant, or if the renovation grant taken up does not reach 25% of the loan amount (ie HUF 1.5 million in the case of a 6 million loan), the loan debt for the remaining amount, the interest subsidy ceases (the interest rate jumps above 5.1% as of now) and the scheme is converted into a market loan. Respectively, the interest subsidy used until then must be repaid to the Hungarian State Treasury in a lump sum within 60 days after the termination of the right to it.

What are the conditions for an interest-subsidized renovation loan?

  • Have a child under 25 in the household
  • one of the claimants must have had a TB legal relationship of at least 1 year
  • public debt relief
  • each member of the household living in the household must have a one-year permanent residence in the property to be renovated (unless the permit to use has been granted within one year or the property has been purchased within one year
  • all members of the family together should have a 50% ownership share
  • the material and labor costs of the renovation must reach half of the amount of the support separately (in case of a renovation budget of HUF 6 million, a material account of at least HUF 1.5 million and a labor invoice of at least EUR 1.5 million are required for the support of HUF 3 million)

What activities are included in the grant?

The activities are precisely defined by law, but outdoor and indoor works can also be accounted for:

  • introduction of water, sewerage, electricity, gas utility services or construction or replacement of its internal network,
  • construction of a bathroom or toilet in an apartment that does not have such a room,
  • the design, modernization or replacement of heating elements, including the use of renewable energy sources,
  • exterior painting, coloring and insulation of the building, including plinth insulation, heat, sound and waterproofing work,
  • replacement of external doors and windows, installation or replacement of shutters, blinds, shutters, insect nets, safety grilles, replacement or renovation of cornices, thresholds,
  • roof replacement, renovation, insulation,
  • construction and modernization of the flue,
  • air conditioning installation, replacement,
  • solar collector, solar system installation, replacement
  • interior renovation, including the replacement, refurbishment, painting, wallpapering, gallery construction, interior staircase design and replacement, installation or replacement of sanitary ware, electrical switches and sockets for the interior walls, floors, ceilings or ceilings of the dwellings, and replacement, installation, replacement or refurbishment of internal doors, windowsills, thresholds, installation or replacement of lamps or luminaires,
  • renovation of a building with the same real estate registration topographical number as the apartment, non-residential premises (such as in particular: summer kitchen, laundry room, storage),
  • fence construction,
  • construction of a car storage room or an open carport,
  • terrace, loggia, balcony, canopy construction,
  • making and replacing space coverings,
  • creation of a winter garden,
  • if the claimant or his child is a person with reduced mobility, specific accessibility works,
  • strengthening the foundation structure, and
  • installation and replacement of built-in furniture or kitchen appliances,
  • design, upgrade or replacement of domestic hot water systems, including the use of renewable energy sources.

After the disbursement of the home renovation loan, the Hungarian State Treasury (MÁK) has a maximum of one year to apply for the non-refundable renovation support. At that time, MÁK will examine the eligibility for the support again. So you have to meet the personal conditions at 2 times as well. The maximum repayment can be HUF 3 million, which can be repaid into the loan, ie the support will automatically reduce the amount of the loan.


If one is thinking of an interest-subsidized renovation loan, keep in mind that although banks may have started lending from February 1, product development has not been able to proceed so quickly at all banks. These processes require lengthy legal, supervisory, and treasury consultations, so it’s worth waiting a few more weeks before storming the banks. This can also be useful because, in a few weeks, the clerks will be more experienced, and it can take a long time for us to claim social security. Unfortunately, queuing is guaranteed there.

Moreover, as mentioned earlier, it is worthwhile to address specific resolution requests and questions directly to the To the Hungarian State Treasury turn to where experts can answer any problems you may have.

Source: Ingatlanhírek by ingatlanhirek.hu.

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