The house – like everything present in everyday and long-term use, is subject to natural wear and requires renewal or replacement over time. In the case of “four angles”, the first solution is usually used. Unfortunately, the renovation itself can be a significant financial burden, which is why many people look for different financing methods. One of them is a home renovation loan. What is worth knowing about him and where to look for help?
Single or multi-family houses are a permanent landscape of large Polish cities, as well as small towns and villages. Some families have lived in these types of homes for generations, while others move to them after years of living in cramped apartments. No wonder Poles value homes. Their popularity in our country is increasing every year . According to Eurostat data, which Homebroker referred to in October 2017 – the percentage of Poles living in homes increased from 49.7% to 57.4%.
Home renovation loan – where to look for it and how it stands out
In most cases, home renovation is rarely financed by current savings. Usually a bank loan is taken for this purpose. Banking institutions willingly lend funds not only for the purchase or construction of real estate, but also for its renovation. The only difference you may notice is the name of the loan itself. When buying a property, we are talking about a mortgage. In turn, for home renovation, the bank grants a classic cash loan that you can spend on any purpose.
You get time first and foremost, when you get a cash loan for home renovation. The bank makes it available within a few weeks – not months, as in the case of mortgage loans. This is primarily due to the lack of need to provide additional documents , such as invoices, proof of purchase, and other formalities related to your property.
How do you get a home renovation loan?
The process of applying for a cash loan for home renovation is very simple.
- At the beginning, in the field of cash loans, familiarize yourself thoroughly with the offer of banks . To this end, we recommend checking the most important information contained in our transparent loan comparer .
- If you have found the optimal offer tailored to your individual needs, apply for a renovation loan . Depending on the bank, you can do it online, by phone or landline.
- After submitting an application for a cash loan, the bank verifies its creditworthiness . To this end, it downloads a report on repayment of existing liabilities from the Credit Information Bureau. BIK presents information in it, including on repayment of loans and credits, i.e. data on timeliness or delays, as well as debt.
- In addition, the bank will verify the amount of income received . As an applicant, you must prepare an income certificate, which is also the only additional formality when applying for a cash loan. The type of contract and its duration are also very important. The lender accepts only legal sources of income. It’s no secret that he also prefers permanent employment contracts.
Based on the above factors, the bank decides whether or not to grant financing. Remember that institutions are quite restrictive in their requirements. Therefore, prepare comprehensively for their verification.
Home renovation loan for young couples – advantages
A cash loan for home renovation brings many benefits. We gathered them all in one place. Here are the benefits of this financing method:
- The loan will be given for any purpose .
- Few formalities when applying for a loan.
- Compared to a mortgage, the bank takes less time to process the loan application . Thanks to this, you can start buying needed materials for renovation much faster.
- It is not necessary to buy credit collateral in the form of e.g. insurance, pledge of property, etc.
- You do not have to own it to get a loan to renovate your property. Consequently, a liability may be incurred, for example, by a family member or partner who shares a flat with the owner.
Mortgage with renovation – is it possible and how to find it?
Although in several respects cash loans seem to be a great way to finance an urgent home renovation, this is not the only solution. For many people, a mortgage is a valuable way to pay home renovation. To obtain more information on the subject, use the help of a consultant at the bank where you apply for funding.
You can do it without leaving your home or by calling the helpline number of your facility. Also keep in mind that the rules for giving commitments may vary from bank to bank. Therefore, get the information you need in advance.
Renovation mortgage – what are its biggest advantages?
A home renovation mortgage is a good solution if you are planning exemplary renovation prospects.
- You intend to carry out an extensive and long-lasting renovation, which you will finish, e.g. in a few months or even years.
- You want to focus renovation work on deep changes, e.g. in the building’s structure, its shape, etc.
At the same time, financial arguments support the choice of a mortgage for home renovation.
- In the case of a mortgage, you have a better chance of obtaining a lower interest rate – which translates into a relatively lower total cost of the loan. Therefore, you will pay the bank less for the service of borrowing refurbishment funds.
- If renovation turned out to be a very expensive undertaking and quick repayment is not possible – the mortgage again proves to be a good solution. It is spread over a very long period (measured in years). The installments themselves can assume very attractive and low values, which means that the obligation is not a big burden for the household budget. They also allow the least drastic way to regulate funds borrowed from the bank.
Not a very expensive renovation – maybe a credit card?
In addition to classic bank loans, there is a third alternative solution. At the moment when you are planning a short renovation it is short and not expensive (for approx. USD 2-3 thousand), a credit card may be a good choice . It allows you to freely purchase the funds needed for renovation work, and also allows quick and convenient access to money.
Banks often offer noteworthy promotions related to the use of a credit card, thanks to which you can count on e.g. low additional costs of repayment. On the other hand, the convenience of a credit card for refurbishing an apartment is not always obvious. It is not a solution for all types of renovation works . If the renovation of the house is comprehensive, and during the work you will use the services of, for example, various subcontractors, “plastic” paradoxically becomes a hindrance. Why? Well, some professionals may require cash withdrawals.
Home renovation loan – is it different from a home renovation loan?
Although the article focused on the issue of home renovation, changes in the interior arrangement of “four corners” can also occur in apartments. And in this matter – a loan for renovation of the apartment is possible! Its characteristics and specificity is identical to the information we have presented above. Interestingly – the financing of renovation works in the apartment is associated with potential facilitation.
Flats in blocks of flats are usually smaller than houses and therefore less expensive. Therefore, the bank may be more willing to borrow money to finance a lower total renovation. Automatically, this involves less stringent requirements for expenses and earnings, making such a loan affordable and quicker to obtain. Of course, this is not a rule, because renovations of apartments can be much more expensive than some housework. However, in many individual cases – consumers have a potentially simplified path to resources .