Almost every person (46%) will do renovation work in his home or apartment. They included, among others Finishing walls and ceilings – painting and filling, laying floors or replacing and laying tiles. Despite the fact that most of us renovate finances our own funds, there is often a need to borrow money for this purpose. What loan can be taken then?
To finish the flat, you can borrow money from the bank, but you must have your own funds, adequate creditworthiness and good credit history. You can, for example, credit or mortgage loan for finishes or cash loan from the bank
Mortgage loan for renovation
Contrary to popular belief, a mortgage does not have to be used solely to finance the purchase of a residential property. It can be successfully used with the thought of renovating your premises. Finishing an apartment for a mortgage requires a fairly long procedure, but thanks to this you get a loan with relatively low interest and principal installments.
All because it is a secured loan. When taking it, it is necessary to establish a security in the form of a mortgage on a residential property. The borrower must have an own contribution of 20%. investment value. A renovation mortgage is a special-purpose loan that must be used by the customer in an appropriate manner.
Taking out a mortgage to finish the flat requires creating a cost estimate, along with their schedule. This is a mandatory annex to the loan application. The bank may grant a loan only for those elements that will increase the value of the apartment and are in hand with it. Financing investments such as lighting and furniture purchases will not be financed with a mortgage. It is usually paid in tranches after each stage of the investment. The borrower must confirm the completion of the finish, usually submitting the appropriate photos to the bank.
Mortgage loan for finishing
An alternative to a mortgage for renovation is a loan, also with a mortgage. Thanks to the fact that it is not a loan, it can be used for any purpose, including the purchase of furniture. It is worth considering this option, although it usually entails higher costs than a targeted mortgage.
Cash loan with free choice
If we do not want to be limited by the bank in connection with the use of funds from the loan, but we also do not want to burden the mortgage of our property, then you can take advantage of a cash loan for finishing the flat.
It is characterized by the fact that it is an unsecured loan of any purpose. The bank does not need to be informed what we want to use it for. The lack of collateral results in the fact that the cash loan will have a higher mortgage interest rate.
What should you choose?
A loan or a mortgage, or maybe a cash loan? It all depends on the individual situation of the client. If you do not have specific refurbishment plans or you want to also buy equipment for your flat, a mortgage loan or a cash loan will work better than a mortgage. The latter will be useful if the renovation is extensive and we will need higher funds for this purpose.