Renovation loan with or without a mortgage order
Banks, including direct banks, have the renovation loan, which is explicitly designated as such, on offer. In addition, everyone can take out a loan for the renovation from their house bank. In principle, renovation loans are classic installment loans or annuity loans, whereby the term can be designed according to the requirements of the borrower. The loan interest is fixed for the duration of the term. The loan amount is tied to the renovation measures, the money paid out can only be used for this purpose. Banks can also request evidence.
Depending on whether the property to be renovated should serve as security for the bank, a distinction is made between renovation loans with or without a mortgage. With the land charge, the owners of the bank transfer a mortgage in the amount of the loan amount. In this way, the bank receives its money from the proceeds of a sale or an auction in the event that the borrower can no longer meet its payment obligations.
In contrast to the mortgage, which is now almost obsolete, the mortgage can continue to exist even after the loan has been paid off and can be used for new borrowing. A mortgage, on the other hand, is deleted immediately after the loan repayment. The land charge is entered in the land register before the loan amount is paid out, which is associated with costs.
Renovation loan versus modernization loan
However, the special renovation loan must be differentiated from a modernization loan. The dedicated loan for renovation differs from a loan for modernization and renovation, which is also only given for these purposes. Thus, all measures that lead to a significant increase in the value of the property and are associated with extension and renovation projects or a renovation fall under the intended use for a modernization loan.
This includes in particular energy-related renovations, for which there are also promotional loans from Instant saving company. For example, the installation of energy-efficient windows, the replacement of outdated heating systems with modern systems and measures for thermal insulation in the roof area are supported. Instant saving company promotional loans must always be applied for prior to the refurbishment, and other requirements and guidelines must also be observed.
A renovation loan, on the other hand, is suitable for wallpapering and painting work, laying new floor coverings or also renovating stairs.
Consumer credit with free use
As a loan for the renovation, a manageable loan such as that offered by numerous direct banks on favorable terms can also be worthwhile for manageable loan amounts. The terms of these installment loans vary between 12 and 96 months, the interest rate is fixed, although depending on the offer, it may depend on the credit rating.