You are planning to buy a flat for a loan, but you have doubts whether it will also allow you to renovate it? There is a simple solution – take a single loan for the purchase and renovation of your apartment.
A mortgage for the purchase and renovation of an apartment?
Not everyone knows that money for finishing the apartment or its renovation (in the case of buying a flat on the secondary market) can be obtained as part of a mortgage.
Additional bank support is usually 10 percent of the value of the flat you buy, which you can spend, among others for the purchase of fittings, tiles, floor or floor panels, a new kitchen (including kitchen furniture) and the purchase and installation of furniture in the building.
As part of the housing and renovation loan, it is also possible to make changes to the layout of the electrical system, to finish the walls, install the walls and repaint the flat.
A loan for the purchase and renovation of an apartment in practice
Let’s give a simple example – buying a flat worth 300,000 PLN, we can apply to the bank for an additional 30,000 for its finishing or renovation. It is also possible to raise this limit. How to do it?
The solution is an appraisal report prepared by a real estate appraiser entered on the list of appraisers accepted by the selected bank. The cost of such a document is usually 450-550 PLN.
– With a thoroughly developed report that takes into account all future expenses, it is much easier to apply for a higher amount of repair credit. Simply put, it is an expense that pays off – explains Domingo Aljur, mortgage advisor from the Kandor branch of the company.
Selected banks also determine the level of possible loan amount for renovation of a flat or its completion with the rate calculated for one square meter (the average on the market is PLN 1,000-1,500 per 1 m2). In the case of a 40-meter flat with a value of 240,000 PLN will mean an additional loan for its finish at the level of 40 to 60 thousand. zł.
Let us add that there is also a group of banks that does not specify such limits at all – they set the amount of the finishing and renovation loan on the basis of the average. What? Well, the total purchase price of the premises along with its preparation or renovation can not be collected here from the average prices of apartments of similar size and standard in the area.
The cheapest loan on the market
And now it’s time for the most important – a common loan for the purchase and renovation of an apartment is today the cheapest loan on the market! If, therefore, we would like to finish the newly purchased apartment with the help of an additional loan, the cost of two such separate loans will be much higher than the cost of one common housing and renovation loan.
In short, it simply pays off! Unfortunately, we also have bad news – people who have decided to take advantage of the government program can not apply for a finishing loan
How do you get an extra loan for renovation?
You will need a cost estimate for renovation work, which must be attached to the “main” loan application. It should be remembered that the bank will “pay” only for these purchases and finishing works that relate to the permanent elements of our apartment – we can not, therefore, include the purchase of a new bed, mirror or TV.
When the loan application approved by the bank for the purchase of a new apartment and its renovation is finally completed, the amount due will be divided and paid in two separate tranches.
– When talking about the secondary market, the first part of the money related directly to the purchase of the flat goes to the account of the person from whom we buy the flat. The second part of the loan, intended for the renovation of the premises, is transferred directly to the account of the new owner. Let us add that both tranches are launched by the bank only after delivering the notarial deed of buying the premises – explains.
And what is the procedure for the primary market? We answer – here the first part of the loan related to the purchase of an apartment is divided into smaller parts, transferred to the developer’s account in accordance with the payment schedule resulting from the development contract. And when all the money goes to the account of the company that built our flat, the bank will provide us with the remaining funds – those for which it will be possible to finish the apartment. Does this mean that you have to wait until the day of signing the notarial deed with the beginning of finishing works? Not necessarily.
– The bank will be happy to give us money to finish our new “M”, as soon as it receives the report of reception of the premises – explains Domingo Aljur.
Let’s summarize then: the money for finishing or renovating the apartment is at your fingertips, so you should “add” it to your mortgage. And it is best to ask an experienced credit adviser for help in this matter – he knows all banking procedures well and knows where the easiest and cheapest way to get a good finishing and renovation loan can be obtained.