Replacing the old kitchen with a new one or repairing a leaking roof comes at a cost. Anyone who owns their own home knows that costs for renovations or repairs must be taken into account. If at some point there is a question of repair work or of decorating the home, this can cost a lot of money. A renovation loan can then offer a solution and is one of the most favorable credits for financing the renovation or rebuilding. Virtually every bank offers the option of taking out a renovation loan that can be considered a form of an installment loan. Other terms can also be used for this, such as renovation loan or renovation loan.
|Lender||Information||Max. Loan||To request|
|Review|| $ 200,000|
Interest (APR) 2.99%
| $ 50,000|
Interest (APR) 2.91%
|Review|| $ 50,000|
Interest (APR) 2.85%
There are a number of characteristics that apply to the renovation loan that can be described as repayable credit. With this form of borrowing money , there is, for example, a standard amount of loan sum and fixed term that are known before entering into the loan agreement. The amount of the credit will be allotted in one go by the bank or other lender. There is no mortgage and the house does not serve as collateral with this credit.
The renovation loan will be repaid by means of repayment in combination with costs in the form of an annual cost percentage . This percentage will be calculated in advance, taking into account the entire term and adding it to the loan sum to arrive at the amount that must ultimately be repaid. The repayment is made by a periodic and usually monthly payment consisting of part amortization and part APR.
Benefit with lower interest rate
Compared to a standard installment loan, a renovation loan usually has a lower interest rate . That is of course an advantage. The house does not serve as collateral, but the house is worth more through repair or renovation work. The bank does set a number of conditions in order to qualify for a renovation loan with a lower interest rate.
One of the conditions may, for example, relate to proving that the home to be renovated belongs to the applicant for the loan. The amount of the loan sum must also be used for renovation or conversion of the house. An additional condition can be set and that is that the work must be performed by a professional company. It is therefore advisable to keep factors and order forms, as well as quotations obtained. Of course there are also the standard conditions, such as having sufficient income to meet the repayments.
Simulation renovation loan
Banks can apply different conditions and interest rates. That makes it advisable to perform a comparison. This can be done, for example, with a simulation via the website of the lenders. This provides a concrete insight into the costs or at least an indication can be obtained. Another option is to request multiple quotes for a renovation loan. If the renovation concerns insulating or energy-saving measures, there is also the option to apply for a green loan .