As beautiful as your own house may be – at some point the moment will come when a house renovation is necessary. If this is only intended for one or two rooms, this can usually be accomplished with the help of the available financial resources. However, if the renovation work is somewhat extensive, it may make sense to take out a loan for the house renovation. It allows a comprehensive renovation according to the ideas of the owners and provides exactly the money that is urgently needed.
What type of credit should I use?
As a loan for a house renovation, there are two types of loan. On the one hand the traditional installment loan and on the other hand the real estate loan or renovation loan, which can be taken out under very specific circumstances.
The installment loan, which is free of fixed uses, would be the first choice if it is not yet clear how extensive the house renovation will be, in what period it should be done and who will carry it out. The loan for the house renovation as an installment loan can be flexibly adapted to any project. Without the bank finding out what, and above all, when the money is needed. This allows a scope that allows the subject of renovation to shine in a very pleasant light.
The loan for a house renovation in the form of an installment loan can be taken out with a good credit rating from any bank or savings bank. The effective interest rate is low and the repayment can be made flexible on request. However, it is important that you have a good Credit Bureau and a fixed income. Otherwise it can happen that the installment loan can only be taken out with the help of a guarantor.
However, if you are looking for a dedicated loan, you should opt for a real estate loan or a renovation loan. These are not available from all banking houses, as they are special loans that are only granted under certain conditions.
Both types of credit require collateral that banks are happy to request in the form of a land register entry. In addition, fixed prices and corresponding cost estimates are required so that the bank can see what the money is needed for. Anyone who can do this will receive very good offers that are ideal as a loan for home renovation.
What about government support?
If you can prove that the house renovation lowers the energy efficiency of the house, you may be able to avail yourself of substantial subsidies. This means that the renovation is supported with loans and bonuses. Whether this is the case depends on which renovation is to take place.
In order to be able to have a claim checked, cost estimates for the work to be carried out must be drawn up. This work must also be carried out by registered craft companies. In addition, it must be described exactly what work is to be carried out and what benefits it has in terms of energy efficiency.
The funding institutions will review the information and will then decide whether to agree to funding or not. If funding is available, only a small amount needs to be raised through another loan. Namely for the work that does not have a positive impact on energy efficiency. We recommend that you check whether a government grant can be used before taking out a conventional loan. This is the case much more often than most homeowners assume.