There are several options to finance the renovation of the property. It all depends on the scope of planned works and our financial and economic condition. We are asking people who are looking for financing in the form of a loan, which one will be the best in a given situation.
Renovation of a house or flat means not only a nuisance related to planned works. It is also a “headache” before proceeding – determining the scope of activities, setting the date and schedule of renovation, choosing paints, wallpapers or tiles and many other “small”, but still important, decisions. One of them is to determine the method of financing potential work. In short, “where to get all the money for it?”, “How to protect yourself so that there is no lack of money for additional activities, the necessity of which will be revealed during the renovation?”.
Fast, cheap and alone
Let’s start with the simplest option – the renovation will be small, we are able to do some of the work ourselves and in addition we want to start work quickly. Oh, such a “refreshment” of the interior for a mountain of two, three thousand zlotys. In this situation, a credit card or a limit in your account (also known as a debit) should be enough.
The speed of access to money, the ease of use when purchasing the necessary materials, long-term interest-free period, the need to pay only the minimum amount – these are the basic advantages of a credit card. In addition, some banks offer “plastics” offering a bonus in the form of discounts in selected DIY chains or grocery stores. The amount saved when buying food can be used for additional materials.
Sometimes, it is possible for a purchase made with a credit card above a certain amount (eg PLN 300) to be spread over the “traditional” installments. All you need is a phone number for a hotline or an application made in electronic banking.
Equally flexible access to financing is guaranteed by debits. However, this solution has two major disadvantages. The first is the lack of an interest-free period. The second is the fact that each account’s influence is directed first to repaying the debt, and only the remaining amount is available to the account owner. Therefore, it is not difficult to overestimate your real financial capabilities.
For a bigger appetite – cash loan
When the estimate of the projected works is worth a few or several thousand zlotys and we will use the services of one or a few professionals, the credit card is no longer enough. Even if we have such a limit on it, it will not help us, because the professional will ask for “live” cash to buy materials. At the end, he will definitely want to receive money, not wait for a transfer. In this situation, you need to think about the cash loan and take into account in the schedule of renovation to settle all formalities.
It is true that some banks offer quick loans for the statement, but their maximum amount is usually three, four thousand zlotys, that is, the amount that will go apart in major renovations. They can be at most a complement to the funds already available.
The loan is always taken at a certain amount. This means that we need to know exactly what we want to renovate and how much it will cost. Credit advisers advise to add a minimum of 10-15 percent to the original cost estimate, as presented by a specialist. for unforeseen expenses. For the borrower it is always an additional cash desk, and for a bank employee is a bigger step on the way to the plan. Below we present offers that can be helpful in successful implementation of renovation plans:
Total demolition – mortgage
The need to carry out a major renovation of a house or flat, which means the replacement of all installations, window and door joinery, the location of new plasters and floors, it will certainly cost tens of thousands of zlotys. It’s best to do it comprehensively, in one go, to minimize the associated nuisance. At the expense of this order, the best solution is a mortgage. In general, it is associated with the purchase of real estate, but there are no obstacles to it being intended for the general renovation of a house or flat already owned.
The security of the money borrowed by the bank is the repaired property, which is associated with the entries in the land and mortgage register, i.e. the establishment of a mortgage. Thanks to this, mortgage loans have a much lower interest rate than standard cash loans. The applicant’s creditworthiness is also different. When using this form of financing, however, you must take into account the need to provide the bank with a long list of necessary documents.
A reasonable installment
Knowing the scope of the renovation and the amount needed, it is time to consider the amount of the installment that we will be able to repay in the future. This is directly related to the loan period. The longer the repayment date, the lower the installment. Unfortunately, the price of this facility is the increase in the total cost of the loan. The most reasonable solution is to choose an installment, the amount of which will not be an excessive burden on the household budget and which will allow you to buy additional equipment at a later date.
As soon as there is a possibility of overpayment of one or several installments, you have to use such opportunities to reduce as quickly as possible the principal to be repaid, from which the interest due is payable to the bank. This is especially important in the case of high mortgage loans taken out for several or several dozen years.
There is always a “danger” that interest rates will be increased and the installments of our loans will increase (mortgage loans are generally granted with variable interest rates), or that unforeseen life circumstances will make it difficult or even impossible for us to pay our liabilities on time. In this context, it is worth thinking about loan insurance in the event of death, job loss or serious injury.
When planning to take out a loan to renovate an apartment or house, it will not check its credit history in the Credit Information Bureau, so that there is time to clarify any inconsistencies with the actual state. It is worth considering closing or limiting the limits on your credit cards, or paying off the “ends” of your existing liabilities to increase your creditworthiness. All this to make the loan short and the repayment time as short as possible. After paying the last installment you will be able to think about another renovation.