Loan for renovation – building society contract or take out a modernization loan

If you are a home owner, you naturally want to preserve your property and increase its value. A renovation has many faces. This can be an embellishment of the facade, a new bathroom or simply a change of scenery and floor renewal. No matter which renovation you choose, it is associated with costs, but the costs cannot always be paid from the current budget. The thought of a loan for a renovation is examined.

If there are major works to be done on the property, such as roof renovation with loft conversions or new windows, it makes sense to top up the existing mortgage, use the ready-to-use building society contract or take out a modernization loan.

Loans that are required for modernization, renovation or refurbishment have different approval criteria than, for example, consumer loans. If the loan amounts are large because a new heating system is installed, the customer can also use the property as security in addition to his income. This increases the willingness of the banks to grant a loan for a renovation even with a large loan amount.

The eligible loan

The eligible loan

If heat-insulating windows or new heating are to be installed on the property and renewable energies are used, a loan for the renovation can be applied for through Intrasavings Bank. These loans are subsidized by the state and have particularly good conditions. However, the loans cannot be applied for directly from Intrasavings Bank, but only through a partner bank such as the house bank.

A loan for a house renovation, for example if thermal insulation is installed with a new facade, can also be eligible. Before you apply for a loan for a renovation from Intrasavings Bank, you should first find out about the terms and conditions for a loan from Intrasavings Bank. The application itself must be made before the measure is taken.

The cheap building money depends on what the borrower wants to renovate. For example, those who renovate or renovate in an age-appropriate manner can receive up to 50,000 USD per living unit at an interest rate of 0.75%.

The real estate loan

The real estate loan

If you are planning a major renovation, a real estate loan can make sense. However, these loans are only granted from a loan amount of 50,000 USD. However, the loan for a renovation must be secured as a real estate loan. This can be done through a mortgage or a mortgage. In addition, these loans are earmarked, which means that the borrower must demonstrate that the loan was used to pay for the construction.

Most of the time, this is done by submitting crafts invoices and cost estimates. Higher interest rates will accrue when the right is securitized. The advantage is the long term and the low interest rate. If it is fixed for the entire term, the borrower can pay the loan for a renovation practically up to his pension. The favorable interest rate then remains.

The installment loan

The installment loan

The classic installment loan also has its advantages, especially when it comes to a renovation loan. With this form of loan, in addition to smaller renovations, larger renovations can also be financed. If the borrower has a good credit rating, he can certainly get a five-digit loan.

The installment loan also proves to be an advantage because it is not earmarked and can be used freely. The repayment of the installment loan is also more flexible than other types of loan. Think of special repayments that are just right if the borrower can expect premiums or special payments annually. Banks approve to repay up to 50% of the loan amount once a year. If the credit agreement is concluded, attention should be paid to the special repayments entry.

However, the classic installment loan also has disadvantages and this can be found with the higher interest rate, especially when a higher loan amount is required. In addition, the terms will not exceed ten years. The installment loan is usually reserved for eight years for repayment.

With a loan comparison, the loan seeker can find cheap installment loans. There are loans up to 60,000 USD with an interest rate of 3.8 to 7.8%. The installment loan is therefore significantly higher than a real estate loan. On the other hand, there is the flexible repayment of the loan.

The building society contract

The building society contract has been on the sidelines for many years and is now finding more and more fans. If it is ready for allocation, it can be used as a loan for a renovation. The loan amount is not freely selectable, since it was determined when the contract was concluded. The disadvantage is the long runtime. If you quickly need a loan for a renovation and have just signed the building society contract, you have to wait up to five years, followed by a year of rest. Only then is the home savings contract paid out.

The building society contract is also flexible and special repayments can be made at any time. He also scores with a low interest rate. If the Bauspar contract is completely replaced, no prepayment penalty is due.

The conditions

The conditions

No matter which loan the customer chooses, the credit rating must be right. This includes a sufficiently high income, a permanent job that should have existed for at least six months. In addition, a fixed-term contract and a trial period are not recognized. The borrower must be of legal age and must not have an encumbered Credit Bureau.

Before the loan is applied for at all, the borrower should check his own credit rating. For this purpose, he draws up a budget with which he compares all income with his expenditure. If there is financial scope, this could be used to pay in installments.

However, experts advise against using financial scope for payment in installments. 1/3 of the remaining amount is recommended. The remaining amount should be saved, so there is always a small financial buffer with which some can be covered.


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