The cost of remodeling is usually borne by homeowners for their own home or for the apartments they rent. In individual cases, the tenant pays the corresponding costs by agreement with his landlord, so that not only property owners apply for a loan to convert.
The processing of the loan for renovation work differs depending on personal requirements and the amount required. If tenants bear the conversion costs, they conclude a contract with the property owner before starting work. This contains a temporary or, in the case of expensive measures, a prohibition of termination by the landlord that is valid until the tenant has passed away, and rules for the tenant’s need to terminate the apartment.
Special loans to convert
KfW Bank grants a cheap loan to convert if the planned measures comply with the current funding guidelines. These change from time to time. Loans for age-appropriate renovation and renovation work on listed buildings are regularly discounted. Loans for conversion are not to be submitted directly to the credit institution, but via a freely selectable financial institution. This bears part of the default risk and decides on the collateral to be provided in the specific case. Real estate loans with land register entry can also be taken up by real estate owners for renovation measures. Your interest rates are cheap thanks to the credit protection, but there are additional notary fees.
If the amount of the renovation is low, most financial institutions draw the line between $ 20,000 and $ 50,000, a discounted loan for renovation work can be taken out even without an entry in the land register. A building society loan to convert requires the possession of a building society contract ready for allocation. Such a property owners as well as tenants can complete. Most regional savings banks and Fine Bank or Agree bank pay a discounted loan for conversion if the borrower commissions regional craftsmen to do the work.
Use a regular bank loan to convert?
A non-earmarked bank loan can be used for any measure. If mortgage lending is not wanted or not possible for conversion costs, loan seekers include loans for free use in their price comparison. It is not unusual for them to discover an offer for a non-earmarked loan, the terms of which are better than those for the cheapest loan with proof of use. In addition to the effective annual interest rate and the term, borrowers pay attention to flexible repayment options when converting to a loan. This includes both the right to free special repayments and the option of reducing the rates or even suspending them at a rate if necessary.
Remodeling financing through private credit
A loan for conversion can be applied for on websites for lending by private individuals. Since the platform members acting as lenders often make their decisions based on the intended use, a precise description of the planned renovation measure makes sense. Private lenders are most likely to sign inquiries for financing renovations if they serve to maintain the quality of life or are necessary for health reasons. In most cases, the desired conversion loan is granted by several private lenders, each of whom subscribe to a partial amount.
The platform operator makes the payment of the desired loan amount as soon as the total amount has been confirmed. Private brokerage platforms also enable loan seekers with limited credit ratings to obtain the loan they need to convert. In addition to the understandable purpose, the lenders take social criteria into account when making their lending decisions on the mediation platforms and deliberately draw up credit requests from members whose loan applications are largely rejected by conventional banks.