There is no standard for a uniformly fitting offer for the loan for renovation. Tenants are looking for a small loan for cosmetic repairs, and house owners may even want to renovate the entire house.
What can you expect? We clearly present the appropriate offers. We also show ways out when a “small credit problem” threatens to prevent the renovation loan.
Loan to renovate – home renovation from scratch
More and more families are recognizing home ownership as the only safe alternative to retirement provision. At the latest when the self-built house is largely paid off, the preservation of the value of the building substance becomes an issue. The loan for renovation is intended to reduce energy costs and enable self-determined living up to old age. With exactly these requirements, current loan offers are seductively cheap.
Under the keywords energy-efficient renovation and age-appropriate renovation, the state supports the renovation project with particularly favorable loan terms and even subsidies. The current conditions can be found on the website of the Cream Bank. In May 2016, for example, program 151 was used to finance a loan of up to USD 100,000 per residential unit.
The interest on the loan for renovation and energy-efficient renovation is effectively fixed at 0.75 percent for 10 years. But that is by no means all that the home renovator can expect. With a repayment subsidy of up to 27,500 USD, the borrower actually repays less than he borrowed. A renovation loan could hardly be cheaper.
Apply for a restructuring loan – what should you watch out for?
The loan application is not made directly to Cream Bank, but via any commercial bank. In the credit comparison, offers can be discovered that add an extra bonus to the mini interest. The subsidized interest rate drops even further due to partial waiver of commission, mostly linked to ineligible loan requirements. It should be noted that the loan for renovation with public promotional loans is subject to conditions.
Public subsidy loans can only be applied for for residential property for which the building application was submitted before 02/01/2002. Refinancing or the renovation of the holiday home, for example, would not be eligible. The loan must be applied for in the planning phase. It is also necessary to work with an approved energy consultant.
“Do it yourself”, as many imagine their renovation, is also not possible. The work must be carried out by specialist companies. After the implementation, the result must be demonstrated within a short period of time.
Renovation loan for ordinary renovation requests
Apartment owners or tenants do not automatically want to renovate the whole house if a loan is needed to renovate it. DIY also has a long tradition in Germany. To want to dictate to a die-hard handyman the energy consultant and the execution by a specialist company meets with little love. Given the currently extremely low interest rates, homeowners prefer to apply for a renovation loan with a land register entry.
If home ownership is debt-free, the loan requirement is below 60 percent of the loan limit, the loan comparison also lures with extremely cheap loans. For example, 10,000 USD could be financed for renovation or modernization – even without a land register entry – from 3.33 percent effective interest. With a term of 60 months, the rate would be 180.93 USD. Overall, the renovation project costs only USD 856.10.
If 20,000 USD of renovation loan were required and financed for 72 months, the low interest rate does not change. The project could be financed at 3.33 percent effective APR regardless of creditworthiness. The rate in this case example is given by the loan comparison at USD 306.39 per month. The loan for renovation costs a total of 2,059.89 USD in financing costs.
Small loan – renovate as the lease requires
Most leases include renovation agreements that tenants must adhere to. The required cosmetic repairs are not a huge renovation project. As a rule, it is sufficient to apply new paint to the walls and to remove wear defects. A loan for cosmetic repairs usually has a volume of 1,000 to 3,000 USD.
This loan requirement fits exactly with the regular small loan with particularly favorable interest rates. Within this sum, the loan comparison offers an offer at 1.99 percent APR. The renovation loan would have to be repaid at this interest rate in a maximum of 36 months. The credit process is simple, a loan applied for in the shortest possible time in the account.
Unfortunately, people with sufficiently good credit ratings are able to obtain regular loans in a quick and uncomplicated way to obtain credit for renovation. Alternatives are required for credit requests with “slight creditworthiness”. With negative Credit Bureau, regular loan offers are unfortunately not an option as a renovation loan.
Renovation loan – received despite small credit problems
It should be clear to every borrower with a negative rating that, unfortunately, large loan requests do not match the current credit rating. Nevertheless, a renovation loan on a small scale can quickly be on the account. The missing bucket of paint could be financed through a micro loan.
Microcredits between USD 100 and USD 1,000 offer little effort with negative creditworthiness, for example Good Finance or Best Lender.
Another alternative is to get a renovation loan of adequate size by Good Finance and Best Lender. The renovation loan is possible despite a lack of creditworthiness if a sufficient number of private investors express their trust in the borrower through bids.