Conditions for applying for a loan for the reconstruction of the apartmentUncategorized
There are several options to renovate, renovate an apartment or house. However, it is not clear which solution is the most advantageous. A dedicated loan offers us the freedom to finance various projects.
Buying an apartment or house is currently not a simple matter. We all have many different conditions that our new home should fulfill. Property with the best properties will find a new owner quickly. Sometimes bidders compete and even offer a higher amount to the owner just to buy a dream apartment. The purchase is followed by reconstruction.
Most people, even if it’s not a new home, renovate an apartment or house every 5 years, for an average of 4 – 5 thousand dollars. Often this amount or part of it is not available. How do we solve this issue? From what money can we finance the necessary work?
Reconstruction of the apartment sometimes costs much more than we thought
Types of loans that we can use in such a situation
Renovation can cost us a lot of money, from thousands of dollars to 7-10,000 or more. It depends on what needs to be changed. For painting we may only need 1000 – 1500 dollars, while a complete reconstruction, including replacement of electric cables and change of tiles, is a completely different category. If we bought a new house, we might have spent most of our money. So when choosing a loan, the main question will be whether we have any amount left to finance or not.
To finance the work we can use:
- non-purpose loan
- loan for reconstruction
- building savings
How to choose the right type?
The question can be examined from several points of view. A few years ago the loans had high enough interest rates and therefore they were not a very advantageous solution, as the total price of the loan could increase the total amount by up to 40 – 60%. At present, however, interest rates are much lower, so we can count on a non-purpose loan.
If you are a true planner and can think ahead, building savings is the solution for you. For this type of funding, the target amount can only be used after the period for which you have concluded a building savings contract. In this form it is possible to use the state subsidy, but recent changes in the conditions of building savings will make this type of financing less attractive.
The reconstruction loan is a special-purpose loan, so it is possible to obtain a slightly better condition from a financial institution than in the case of a non-purpose loan. However, it should be noted that this is a special-purpose loan and the bank will want to confirm from us what we have paid the loan for. For this reason, for those who are do-it-yourselfers who do some of the renovation work themselves, this loan is not satisfactory as they will not be able to document the work they have done themselves.
Submitting an application for a special purpose loan for a reconstruction of an apartment.
With interest rates reaching an acceptable level, these types of loans have become very popular. For the most advantageous we only pay about 5 – 6% APR.
Almost every financial institution, bank and non-banking company offers non-purpose loans. If the applicant has a good credit rating, he does not have to worry about not getting a loan to finance the work.
Why is a non-purpose loan more profitable than other types of loans? Consider the following statements:
- You do not need to withdraw a loan from the bank where you maintain a current account. If you find a better deal elsewhere, you can have your money in your account within a few days.
- Mortgages can offer lower APRs, but since the repayment period is much longer, you ultimately pay more.
- Usually, an identity card and proof of income are sufficient for the application.
- No need to prove anything, we can use money freely.
So, after examining the topic, we see that a non-purpose loan can be the most advantageous solution when it comes to complementing finance for reconstruction work.
The amount of the loan depends on several parameters. If we already have a loan – for example a mortgage – the amount of a non-purpose loan may be lower, because by law banks can not let us out of debt above average. Therefore, the monthly repayment of all our loans cannot exceed a certain percentage of our confirmed monthly income. We should strive to pay the selected loans as soon as possible, since then the total amount paid for the loans will be the lowest.