Renovation can be expensive stuff, especially if there are rooms like kitchens or bathrooms that need renovation. In the worst case, this can cost hundreds of thousands. There are very few who have the opportunity to save so much, considering all the other unmarriages a house often brings, so a loan in the bank becomes the solution. In this article there are two different loans for this purpose we will go into more detail.
The first thing we should look at is a consumer loan
This is a loan you can take without having to provide collateral in anything and you can spend the money on exactly what you want, the bank will not ask what to spend the money for. An unsecured consumer loan can provide high interest rates and can cost you a lot, especially if you don’t pay it down as fast as the bank wants.
If you can, you should definitely provide security, eg the house, then the interest rate will be lower. The second loan we are going to enter into is arguably lower interest rate, so a consumer loan should be plan b.
The second loan is a so-called refinancing, which is a type of loan
Then you refinance the mortgage and borrow some extra that you can spend on the renovation. A mortgage should always be used on housing, and that is exactly what you are going for. You will spend the money on a home you already have, and that will result in increased home value. The banks are often a bit more lenient when the money is used to increase the value of the house.
It should not be a problem for you to get refinanced your mortgage as long as you have paid your installments on time and have a good relationship with the bank. Then the bank sees that they are less likely to lend you more money.
If you want to buy a home that needs some renovation, you should definitely consider taking out extra loans in the same slice for just this purpose. The banks tend not to be so hard to convince as they see that the house will increase in value as a result. This assumes that you have a tidy economy and willingness to pay which is visible to the bank.