architecture

Redesign the house – finance extensive renovations properly

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When it comes to mortgage lending, most consumers think of buying or building a property. However, if you have had enough of your interior or garden, you might think about an extensive renovation or renovation right away. In both cases, five-digit amounts accumulate quickly. This also applies if only the garden is to be rearranged. Depending on the scope of the planned measures, the thought of a new mortgage loan really plays a role in the planning.

Construction financing for renovation – increase, reschedule or subordinate?

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Should the Redesign of the property or the outdoor facilities are financed through a mortgage, the question remains whether the existing loan can be topped up. However, if the interest rate is lower at the time of the renovation, this variant makes little sense from a financial point of view. In this case, a new subordinated loan is recommended, provided that the surcharge for the subordinate loan is not so high that the interest rate exceeds the original condition. Debt rescheduling would be an option if the existing financing is close to the end of the fixed interest rate and a reorganization with generally more favorable conditions is planned. Of course, this topic does not apply if it is only a matter of investing in new furniture or a new kitchen. In this case, no classic construction financing comes into play. However, some banks offer so-called housing loans. These move in the interest rate between mortgage and installment loan rates. The prerequisite is that you already own real estate and that it is used for residential purposes. There is no land charge for these housing loans.

However, it becomes more critical when the home is to be embellished on the one hand, but the bank cannot grant a loan for credit reasons. An alternative solution is needed here.

Financing from Switzerland for renovation

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Loans from Switzerland, also known as loans without Schufa, are an option if a Schufa entry is to be avoided or if a new loan is in the way. On the side of the comparison portal from kredittestsieger.org for example, there are corresponding providers. A loan without Schufa does not mean that the lender does not make any demands on the borrower.

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Of course, the prerequisite for such a loan is primarily the age of majority. This requires a place of residence in the Federal Republic of Germany as well as an account with a German bank. A salary assignment serves primarily as security. Self-employed people who have always had greater problems in Germany to get a loan than an employee, however, get a loan much easier in Switzerland. This also applies to mortgage lending.

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The Swiss institutes do not necessarily insist on a salary assignment, but also take other securities into account. Especially with the introduction of the Residential Home Credit Policy, which completely leaves out the value of the property as security, this form of construction financing without private credit could gain in importance. After all, the number of approved loans in Germany has fallen by 20 percent since the directive was introduced in March. So there are definitely reasons why one or the other property owner or prospective owner will look for a suitable loan across the border into the Alpine republic in the future. The times when loans without private credit had a dodgy stable odor are a thing of the past. They are establishing themselves as a regular financing instrument.

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