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Loan for home renovation – everything you need to know

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Loan for renovation – everything you need to know

Sometimes larger renovations are too much for us and we are forced to use the help of banks, so that our apartment finally looked as we expected. We suggest which credit to use and what to pay attention to when choosing a bank offer. It’s nothing scary!

Cash credit

It is not associated with a long verification process, you do not need our own contribution or a huge folder of documents. Also, the bank does not care what we actually spent the granted money on (whether it was really for an apartment or for sudden problems). However, if we are planning a large-scale general renovation, the disadvantage of such a solution may be the low limit of the amount we can borrow.

What do we need to get a cash loan?

The granting of such a loan will be determined by our creditworthiness (among other things, our income), history of repayment of previous obligations (whether they were timely) or type of employment (employment contract, own business, etc.), as well as regular monthly expenses (e.g. rent, alimony, other loans), or information about drawing a pension. It is worth knowing that this information will be verified in the BIK. Do not forget to take to the bank your identity document.

Mortgage loan

With this solution, we get a larger amount, lower interest, long repayment period, and thus – lower installments. It is a good idea to get a mortgage loan to help you get a better rate of interest and a longer repayment period. However, such a loan will not be obtained quickly, the process of analyzing creditworthiness takes longer compared to a cash loan.

What do we need in order to get a mortgage?

Such an agreement contains a lot of formalities. In addition to the documents needed to obtain it, we need, among other things, a credit application, data of applicants, documents about the property we intend to renovate. In some cases also land register number or cost estimate of the investment

>> See also: What do you need to know before buying an apartment for credit?

The collateral needed is usually 20% of the borrowed amount (sometimes it is 10%). Such collateral may also be things such as real estate. Then, however, you need its valuation (it is done by an appraiser). The exact requirements are on the website of each bank providing similar credit. It is worth getting acquainted with it before visiting the branch.

Mortgage loan for purchase of an apartment and its renovation

It is worth mentioning the possibility of combining the purchase of an apartment with financing its renovation. Then the own contribution for this purpose is usually 0%, the liabilities may also be lower. Most banks add them together and set a common limit for them. Rates are set individually.

Other ways

If you’re going to borrow a smaller amount of money from the bank, it’s worth considering whether to get it from a credit card, which is characterized by a short repayment time, but also fast access to funds. Then we do not have to deal with additional formalities, it is enough to check the operation of such an opportunity in several banks and choose the best option for us. You can also use a cash loan.

What credit will be perfect?

Thinking about what kind of credit will be right for us, it is worth remembering that everything depends on the cost and size of the renovation we are planning. In case of projects with smaller costs, a cash loan will be a better solution, while for bigger ones – a mortgage. It is also good to look at combined offers.

When choosing a credit, you should learn about the offers of various banks available on the market and choose a convenient option for you. Many of them also offer credit with the annotation already in the name “for renovation”, giving us various possibilities.

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