When taking out a real estate loan, the goal is to look for a loan that supports almost the entire real estate project. Besides, it is possible to include the possible costs of the works in the loan. Depending on the credit selected, there are various possibilities to finance the work to be done to make the accommodation habitable.
The 3 possibilities of mortgage with work
To bring together the mortgage and the works, the bank offers various possibilities which require separate repayments:
Loan with two lines of credit: this is a loan split in two. The first corresponds to the purchase value of the accommodation, while the second is capital devoted to works. In this case, the amount dedicated to the work is released as and when it is carried out. For this type of loan, the cost of credit is close to that of a conventional home loan without work. On the other hand, it involves interim interest, that is to say a release fee each time capital is released.
Loan with a single line of credit: this type of loan makes it possible to free up capital at one time for the purchase of real estate and for supposed work. To grant it, we take into account the debt ratio which is the share of monthly payments payable on the borrower’s income. This cannot exceed 33% without possible compensation for any rental income.
Loan with total deferral of repayments: this is like the previous case. In fact, only one line of credit is taken into account. On the other hand, reimbursement to the bank is made only when the accommodation is restored to its working condition, that is to say when the work is finished. This allows savings to be made for future monthly payments.
The advantages of contracting a single financing
Including the cost of the work in the home loan avoids taking out an additional loan. Being in a situation of increased debt is not easy. Thus, there is no need to reimburse other monthly payments.
One funding will also save money. Indeed, in certain situations, it is possible to carry out the work yourself, although most of the time, when applying for a mortgage, the bank requires that these must be done by a professional. The bank can thus free up a specific sum for the renovations to be carried out. This allows the work to be financed directly, without having to advance the supposed costs.
Note that a solution is not regularly proposed but it allows both to finance the acquisition and the work, only if the mortgage has already been put in place, it is the credit consolidation. This operation actually offers to buy the mortgage and add to the contract the amount of work to finance, all allow you to take advantage of a single monthly payment.