The renovation loan: what should be considered

Renovations in the house or in the apartment often tear a huge hole in the household budget. Depending on how extensive the planned work turns out, an immense amount of money quickly comes together here. For such renovations, the credit of the same name was launched. A renovation loan is a very special form of installment loan, but with some conditions attached to it.


What is a renovation loan and how does it differ from other loans?

  • What are the benefits of a renovation loan?
  • Carefully calculate and prepare thoroughly

What is a renovation loan and how does it differ from other loans?

What is a renovation loan and how does it differ from other loans?

In principle, a renovation loan is a normal installment loan : The borrower receives a predetermined amount paid, which must then be repaid along with the corresponding interest in monthly installments. However, it is a special purpose loan, which means that it may only be used for the planned renovation. In fact, many banks are asking for evidence proving that renovations have really taken place.

This can be bills of craftsmen or purchase receipts of wallpaper, flooring and other materials. The renovation loan must not be confused with a modernization loan, even if the uses are very similar. But there is one important difference: in the case of a modernization loan, structural changes are made to the property so that the value of the property increases. Examples are an extension, the installation of a new heating system and an energetic renovation, more information on . The renovation loan, on the other hand, preserves the value of a property, so the property is not upgraded at the same time.

What are the benefits of a renovation loan?

Since a renovation loan is earmarked, the interest rate is always lower than a classic installment loan. In contrast to a real estate or restructuring loan, which can only be used by the owner of the property in question, a renovation loan is also aimed at tenants. So no land register entry must be proven; read on on . Good to know: Renovation measures that have been carried out in the past must not use the loan. The bills for the renovation work must therefore have been issued after the payment of the loan amount.

Carefully calculate and prepare thoroughly

Before the renovation and the use of a renovation loan, the potential borrower should first get an overview of the expected costs of the measure. This works, for example, with corresponding cost estimates of craft companies. In this way, the amount of the loan amount can be estimated as accurately as possible. A loan amount set too low is just as annoying as too high a sum, which then unnecessarily incurs interest. Therefore, play some scenarios online through construction loan comparison portals like . By the way: Banks do not explicitly apply for the renovation loan, but it definitely pays to ask precisely. Because whether Sparkasse, Deutsche Bank, Volksbank or Commerzbank, almost every institute offers him.


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