Is the furnishing of your apartment obsolete and out of date? Do you want change, but are you satisfied with your current address? Then the ideal solution for you is the reconstruction of an existing apartment or its part. Only a few of us have enough money to finance the reconstruction and new equipment of the apartment by itself, without the help of a loan. However, there are a number of different loans and it is difficult to know them. So how do you choose the right one?
At the beginning you need to think about how much renovation you intend to undertake. Do you want to replace the kitchen or sofa in the living room? Or are you planning a major conversion including new electricity, heating and water distribution? Determine how large the planned reconstruction of the apartment will have. This will depend on the budget and subsequently on the type of loan for reconstruction.
What to include in your budget?
A well-designed budget is the basis for proper loan selection . You should count not only the material itself, new furniture and appliances. Other costs must also be borne in mind: transport and assembly, the work of craftsmen or the payment of VAT. Do not forget about the possible remuneration of the home architect. These payments can increase the final price of reconstruction by tens of thousands of dollars.
We strongly recommend raising your budget a little further. It should be at least 10% of the total. It’s not a good idea to have a budget set up to spend your last crown. You never know what unexpected expenses you will encounter.
Suitable types of loans
When you want to reconstruct an apartment, you may think that you can get a loan faster with non-banking companies because they do not require proof of income. However, this is not true, even for non-bank loans, creditworthiness must be demonstrated. For this type of loan, it is not good to negotiate a loan such as short-term loans, cash loans or fast online loans without liability. It is better to contact a banking institution that will guarantee the interest and repayment period. For the reconstruction of own housing there are also special more advantageous offers than ordinary consumer loans. So what are the options?
Building savings loan
- Advantageous interest rate, the product is intended directly for financing construction or reconstruction of housing
- Sometimes it is only reached by clients who have been saving for at least two years and have already saved 40 to 50% of the target amount, but this is not the rule, some building societies do not require savings, but you will find here other various conditions
- It must also be approved by the bank
- Credit limit – it is not possible to exceed one million, in the case of a bridging loan two million dollars
- It allows financing a major reconstruction, including the replacement of windows, insulation, new wiring or roof repair house
- Remember that mortgage interest can be claimed in the tax return, and only in the case of the property in which you primarily live, ie. you don’t rent it, either short or long term
- Due to the longer repayment period, the repayments are low and the client receives a sufficient loan in a large amount
- Consumer loan is suitable when you do not reach a mortgage and at the same time you are not entitled to a building savings loan
- It is suitable for financing minor changes in the home, such as a sofa or new electronics. It has no purpose, so it can be used for anything
- The disadvantage is high interest rates, which can make such a loan expensive
- With some merchants it is possible to achieve 0% interest with proper repayment of small loans
- Tied to the acquisition of specific appliances and products
- It should be borne in mind that tied consumer credit is extinguished when the consumer withdraws from a contract for the purchase of goods or the provision of a service where the price of the good or service is wholly or partly paid by the tied consumer credit. The consumer is obliged to inform the provider of this fact. The extinction of tied consumer credit shall not be linked to the imposition of any sanctions by the provider or a third party
In any case, remember that when looking for a loan for renovation it is important to take the time to choose the most suitable conditions for you. Compare the offers of different banks and choose a loan that will help you meet your ideas of comfortable new housing.