Nothing lasts forever – not even the luster and freshness of new buildings. The façade will be plastered with patina, natural elements will be embedded in the load-bearing beams, and the parquet will warp over time. Then comes the reconstruction. Financially, no fun – costing hundreds of thousands to millions is the rule rather than the exception. And because not everyone is keeping such an amount under the pillow, it is necessary to reach for a loan. But where to get it and what interest should be calculated?
Not only the acquisition of real estate financial institutions think. Well they are aware of the merciless ravages of time and therefore offers clients credit products intended for the reconstruction of houses and flats.
Solution One: Mortgage
If the purchased property needs urgent conversion, the amount for reconstruction can be included in the loan itself. Usually this is not a problem – the object after reconstruction has a higher value. Banking institutions are therefore willing to include the necessary funds in the mortgage.
Solution two: Building savings
Another option is a building savings loan. Savings Banks provide it after meeting the three necessary conditions (saving a certain percentage of the target amount according to the Bank’s terms and conditions, saving for at least 2 years and a sufficiently high rating number);
How can you deal with a situation when the bank refuses to increase the mortgage loan and you are not entitled to the building loan ?
Solution three: bridging loan
One of the few remaining options for financing the reconstruction is the establishment of a bridging loan. The conditions of the loan and above all the client’s ability to fulfill his obligations play a role here.
With or without pledge?
The amount of money obtained from the bridging loan is typically in the order of hundreds of thousands of crowns; therefore, savings banks do not usually require a lien. On the other hand, however, such a loan is burdened with a higher interest rate – often over 6%.
Interesting interest, on the other hand, is prepared for those who decide to impose a lien on their property. Depending on the final amount, the interest rate can be between 2 and 4%.
What about fees?
The amount of the bridging loan arrangement fee is determined by the internal policy of the particular savings bank. Some charge nothing, while others insist on a fee of 1% of the loan amount. In addition, the client must also take into account the credit management fee; it is several hundred crowns a year.
It is not advisable to postpone the reconstruction of the house. Do you know where to draw your money? Do you have any idea which credit product is best for you ?