Homeowners who want to increase or maintain the value of their property should carry out expansion and remodeling measures at regular intervals. Alternatively, those who cannot or do not want to finance the costs from existing savings can take advantage of various credit offers from the banks. In addition to development loans from kfw and classic, mortgage-backed construction loans, many institutions now also offer modernization loans, which are installment loans that are ideally suited for smaller-scale measures in particular.
Comparison calculator for modernization loans
Financing expansion and remodeling
In order to maintain the value of the home or to increase it over the years, various measures may be necessary. From the installation of new windows to a more efficient heating system to energy-efficient renovation, many things are possible. To finance such projects, banks offer special modernization loans or renovation loans, which are usually granted as earmarked funds. Development loans from the kfw banking group are also possible.
These are granted primarily when buildings are renovated for energy efficiency and CO2 emissions can thus be significantly reduced. They are usually characterized by significantly lower interest rates and a more flexible repayment schedule. However, both types of real estate loans are usually secured by entering land charges in the land register, which can involve high costs for borrowers. Finally, the land charge must be registered via a notary public and finally entered by the land registry office.
Modernization loans as installment loans
Borrowers seeking an alternative to real estate loans and kfw loans often use the renovation loan, which are granted in the form of installment loans. Unlike classic consumer loans, they are also tied to a specific use within the property and may therefore only be used for renovation or modernization purposes.
With or without proof of use?
If the conditions of the loans allow it, they may not only be used for new windows, the renovation of the bathroom or a new heating system. Often it is also possible to finance the redesign of the garden or the new fitted kitchen with this loan. In any case, it is important that the use of money can be proven by presenting invoices or receipts. In many cases, banks require proof of the use of the money directly when the loan application is submitted.
This is what distinguishes modernization loans
Modernization loans, which are often also granted as home loans, are characterized by some special features compared to installment loans. Thus, they are usually only from an amount of 5.000 euros, but can be repaid with sums of 50.000 – 70.000 euros can be borrowed. In addition, it is possible to obtain financing with terms of 120 months or more. To be completed within ten years. Due to these long terms, even larger loan sums can be financed without any problems. Which monthly installment for the desired loan amount, can be calculated online.
With or without land register entry?
- Awarded as an installment loan, not as construction financing
- Earmarked loan, especially for renovation and modernization work
- Loan amounts from 50.000 – 70.000 euros
- Maximum term up to 120 months
- No land register entry necessary
If one compares the modernization credit with classical real estate credits probably the largest advantage lies in the renouncement of the registration of the land charge. Despite borrowing, the house remains unencumbered with it, also the costs for the registration can be saved. Depending on the amount of the land charge, this can result in savings of several hundred euros. Nevertheless, borrowers do not have to fear higher interest rates, because the earmarking means that modernization loans are similarly favorable to real estate loans.
Modernization loan requirements
In order to be able to take out a modernization loan from the house bank, a direct bank or also the kfw, credit seekers should fulfill some requirements. In this context, it is particularly important to have a fixed monthly income and a positive credit report, as this is the only way to prove creditworthiness. Whether and under what conditions a loan can be granted to self-employed persons and freelancers must be examined individually.
Installment loans are only available to a limited extent for these groups of people, and strict guidelines also apply to modernization loans. In addition to this, credit seekers should also be the owner of a property, which must be indicated in the credit application. While this is not explicitly used for security, existing assets still reduce the bank's credit risk.
Conditions at a glance:
- Positive credit check
- Fixed, secure income from non-self-employment
- Positive schufa information
- Ownership of a property must be proven
Easy online application for modernization loans
Since modernization loans are similarly standardized as installment loans, they can also be granted without problems via the internet. Before applying, however, credit seekers should take the opportunity to compare different offers. It quickly becomes clear what conditions are charged and where the cheapest modernization loan can be taken out.
In addition to the amount of interest, consideration should also be given to whether and under what conditions early repayment of the money is possible. Who agrees upon special repayments, can repay parts of the credit already before expiration and save so high costs. It is also important to carefully review and determine the cost of the project. This way, the total amount needed and the amount of credit required is known from the start. Expensive additional financing can be avoided in this way.
Here's what to look for when taking out a loan:
- Loan comparison via the internet ensures favorable conditions
- Compare not only interest rates, but also loan conditions
- Special repayment rights provide flexibility
- Check exact costs and avoid expensive follow-up financing
If attractive conditions could be found, the immediate online application via the internet is possible. For the credit decision, the bank requires not only personal data such as name, date of birth and address, but also information on income as well as the property. Once everything is in place, the bank will determine if the loan is possible and make a preliminary decision. If this is positive, customers can assume that the application will be approved and send it signed to the institution. Often, the requested funds are already available on the current account after two to three working days and the construction project can start.