Does your house need a makeover, do you want to expand your living space? As with new construction, you can do finance the works thanks to a ready. What are the steps and how to choose the right financing solution? We take a look at how to borrow to renovate.
Why borrow to renovate or extend your home?
Spread out expenses
Rather than committing a large sum of money all at once, it may be better to spread the cost of the work over several years while enjoying the benefits of the improvements immediately.
Borrow to finance urgent work
Redoing your roof, a leaking window, insulation, etc., postponing certain interventions can be a very bad calculation in the long term. The problems can in fact become more serious and lead to additional costs in the future.
To consider work with peace of mind, read the article “ How to plan your home renovation? ».
A loan to extend your home
Your family is growing, you now work from home, you need more space? Creating an extension can be less expensive than selling and moving. Enlarging your living room, acquiring an extra room to make a bedroom, an office, an extension is a good way to improve your quality of life.
To go further read the article “ house extension: expand without moving ».
A loan: for what type of work?
Un renovation credit can cover a very wide range of work. Thus, a loan can allow you to consider both interior decoration work, such as painting, a new kitchen, renovating the floors, the bathroom, as well as more important work such as renovating the roof, walls, electricity, windows. A loan is also the solution to consider if you want to extend your house, with the building an extension. On the other hand, all the credit solutions are not suitable for all of your projects.
Borrowing to renovate: assessing the cost of the work
Before going to see your banker, you must precisely assess the cost of work that you are considering. Ask several quote to professionals. Then include a margin of about 10% to cover unforeseen events.
Check your borrowing capacity
When a loan is requested, the bank or credit institution first checks your borrowing capacity based on your income, your expenses, your savings and other credits that you may have in progress.
Le debt ratio must not exceed 35% of net monthly income. Beyond that, the bank generally refuses the loan, but some banks may be flexible for high incomes.
You can calculate your debt ratio yourself using the online calculator available on the website of public service.
Borrowing capacity, what adjustments?
However, it is possible to make some adjustments. To keep the monthly cost of the work in line with your standard of living, you can increase thepersonal contribution or extend the repayment period to reduce monthly payments.
Borrowing to renovate: what type of loan?
The home savings loan
If you have a Home Savings Plan (PEL) and/or a Housing Savings Account (CEL), you can apply for a loan at a favorable rate for expansion works or renovationThe maximum loan amount available from a PEL is €92 and €000 for a CEL. The two can be combined up to a maximum amount of €23.
A PEL or a CEL, for what work?
The work must have an impact on the accommodation. It may therefore concern an extension, an energy improvement or a major renovation. Renovating your bathroom, its roof, its kitchen or renovating its heating are therefore eligible works. Small decoration works (painting, floors) cannot be financed by this loan.
Taking out a mortgage to renovate your home
Le mortgages is not only used for construction orbuying a house. It can just as well be used for finance repair work, improvement or maintenance of the property. This is probably the ideal solution if you have purchased a house to renovate. All expenses will thus be grouped into a single loan, which avoids multiplying loans. duration of a mortgage loan is variable and generally negotiable with the banker.
Since January 1, 2024, it is possible to exceed the maximum debt period of 25 to 27 years if the real estate loan, linked to the acquisition of an existing property, gives rise to a work program whose amount represents at least 10% of the transaction (compared to 25% in 2023).
Go further by consulting the article “ 4 tips for getting a good mortgage ».
Consumer credits to finance work
All consumer credit offer an amount between €200 and €75.
Financing your renovation with the allocated works loan
The assigned credit is a ready for consumption whose use is linked to the purchase of a good (car, furniture, household appliances, etc.) or a service (home improvement, travel, etc.). Thus in the case of loan works affected, it can only be used for the completion of works planned and requires the presentation of supporting documents.
Rates are often lower than those of a personal loan.
A personal loan for home improvement
Unlike the assigned credit, this loan can be used freely, without having to provide supporting documents. The work can more easily evolve over time without having to take steps. However, this flexibility is linked to repayment rate more important. The interest rate The personal loan is freely set by the lender (bank or credit institution).
Once granted by the bank, if you have not exercised your right of withdrawal, the bank may pay you the loan money after the expiration of the 7 calendar day period.
How is the credit application made?
The first step is to fill out the file with the bank or the credit institution. The latter then makes a proposal. Once the agreement is signed and the supporting documents sent (ID, proof of address, proof of income), you must wait for the final agreement of the credit institution or the bank. The funds will then be released according to the conditions required by the contract.
Use a broker for your work loans
Un broker is an intermediary between the bank (Intergovernmental Panel on Climate Change) and the credit institutiont and the borrower. Their role is to help you find the credit best suited to your project. This professional helps you negotiate with banks:
– A loan with a interest rate competitive
– Conditions adapted to your personal situation, such as the term of the loan or monthly payments.
– More advantageous additional costs (administration fees, early repayment penalties, etc.).
To better understand the role of the broker, read the article “ finance the construction of your house in 2023/2024 with a broker ».
when you are considering renovations, the loan allows you to consider more serenely a major renovation that will allow you to increase both your comfort and the value of your property. Do not hesitate to ask your advisors for help Maisons Sic for all your procedures concerning the renovation of your house.
