Regardless of whether it is your own home or a rental property. Each real estate comes sometime into the years and requires a refreshing in the most diverse ranges. As long as it's just renovating and not refurbishing, the cost and effort involved in the work is still reasonably contained. Despite all this, financial spheres can also be reached when renovating, which many consumers had not imagined and therefore cannot raise the money needed for this from their own resources. A loan for the renovation must be taken out to carry out the work properly and in a high quality.
Is a construction loan worthwhile?
When renovating a home, many consumers always think first of a construction loan. It can be taken out at very favorable conditions and is also available when larger loan amounts are needed. Disadvantageous is however the fact that the credit for the renovation is registered in the form of a building loan into the land register, which can be regarded as a security as well as a load. In addition, a building loan is worthwhile only from a sum of about 50.000 euros. And this should hardly arise for a simple renovation. Therefore, we recommend considering the construction loan as a loan for renovation only after all other options have been considered and exhausted.
The installment loan
Probably the most classic loan for a simple renovation is the installment loan. It offers a free purpose and can therefore be used flexibly. In addition to the cost of renovation, it can be used, for example, to buy furniture that will be needed afterwards. Or the many small things like new screws and dowels to hang the pictures and fix the shelves, moldings and carpets, paints and accessories. Around a renovation many smaller and larger additional costs result, which are forgotten gladly once and the budget then twice load.
Very worthwhile also the so-called housing loan. It is specifically tailored to the renovation or refurbishment of a house or apartment and can also be taken out if it is only a rental property. The interest rates are usually somewhat lower than the installment loan. However, the money from the housing loan may only be used for the renovation and not for other things, because it is an earmarked loan.
The kfw loan
Who wants to beautify his home with the help of a loan for the renovation, can sometimes also take advantage of government funding. The low-interest loans from the kfw bank come into play when the kfw program "housing modernization" is used. Should the renovation also result in an energy improvement, additional subsidies and low-interest loans can be obtained from the kfw bank.
It is important here that the subsidies and loans are always applied for before starting work. Since the loans and assistance are earmarked for a specific purpose, cost estimates must be submitted with the loan application to prove the amount of the costs incurred and thus show how high the loan amount for the renovation must be. Applications can be made at any bank that cooperates with kfw bank.