Modernization loan for your property: calculator & comparison

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Homeowners who want to increase or maintain the value of their property should carry out extension and conversion work at regular intervals. Alternatively, those who cannot or do not want to finance the costs from existing savings can take advantage of various credit offers from the banks. In addition to KfW development loans and classic, mortgage-backed construction loans, many institutions now also offer modernization loans, which, as installment loans, are ideally suited for smaller measures in particular.

Financing expansion and renovation measures

In order to maintain the value of the home or to increase it over the years, various measures can be necessary. From installing new windows to a more efficient heating system to energy retrofits, many things are possible. For the financing of such projects the banks offer special modernization loans or renovation loans, which are usually assigned as earmarked funds. Development loans from the KfW banking group are also possible.

These are awarded mainly when buildings are renovated for energy efficiency and CO2 emissions can thus be significantly reduced. They are usually characterized by significantly lower interest rates and more flexible repayment. However, both real estate loans are usually secured by registering land charges in the land register, which is sometimes associated with high costs for borrowers. Finally, the land charge registration must be done through a notary and finally registered by the land registry office.

Modernization loans as installment loans

Borrowers looking for an alternative to real estate loans and KfW loans often use the renovation loan, which are granted in the form of installment loans. Also, unlike traditional consumer loans, they are tied to a specific use within the property and therefore may be used exclusively for renovation or modernization.

With or without proof of use?

If the conditions of the loans allow it, they may not only be used for new windows, the renovation of the bathroom or a new heating system. Often it is also possible to finance the redesign of the garden or but the new fitted kitchen with it. In any case, it is important that the use of the money can be proven by presenting invoices or receipts. In many cases the banks demand proof of the use of the money directly when applying for a loan.

This is what distinguishes modernization loans

Modernization loans, which are often also granted as home loans, are characterized by some special features compared to installment loans. Thus, they are usually only funded from an amount of 5…000 euros, but can be granted for sums of 50.000 – 70.000 euros can be taken out. In addition, it is possible to finance with terms of 120 months or more. to be completed within ten years. These long terms mean that even larger loan amounts can be financed without any problems. Which monthly rate for the desired loan amount is incurred, can be calculated online.

With or without land register entry?

  • Issuance as an installment loan, not as a construction loan
  • Earmarked loan, specifically for renovations and upgrades
  • loan amounts of 50.000 – 70.000 euros
  • Maximum term up to 120 months
  • No land registration required

If you compare the modernization loan with classic real estate loans, probably the biggest advantage is the waiver of the registration of the land charge. Despite borrowing, this leaves your house unencumbered, and you can also save on registration costs. Depending on the amount of basic debt, this can result in savings of several hundred euros. Nevertheless, borrowers do not have to fear higher interest rates, because the earmarking modernization loans are similarly favorable as real estate loans.

Modernization loan requirements

In order to be able to take advantage of a modernization loan from the house bank, a direct bank or even the KfW, credit seekers should meet some requirements. In this context, a fixed monthly income and a positive Schufa report are particularly important, as this is the only way to prove creditworthiness. Whether and under what conditions a loan can be granted to self-employed persons and freelancers must be examined individually.

Installment loans are only available to these groups of people on a limited basis, and there are also strict guidelines for granting modernization loans. In addition to this, credit seekers should also be the owner of a property, which must be specified in the credit application. Although this is not explicitly used as collateral, the bank's credit risk is nevertheless reduced by existing assets.

Conditions at a glance:

  • Positive credit check
  • Fixed, secure income from non-self-employment
  • Positive Schufa information
  • Ownership of a property must be proven

Simple online application for modernization loans

Since modernization loans are similarly standardized as installment loans, they can also be granted without any problems via the Internet. Before the application is made, however, credit seekers should take the opportunity and compare different offers. So it quickly becomes clear what conditions are calculated and where to take out the cheapest modernization loan.

In addition to the amount of interest, consideration should also be given to whether and under what conditions early repayment of the funds is possible. If you arrange unscheduled repayments, you can pay off parts of the loan before it expires and thus save high costs. It is also important to carefully review and determine the cost of the project. This means that it is clear from the outset what total amount is required and how high the credit requirement is. Expensive additional financing can be avoided in this way.

This should be taken into account when taking out a loan:

  • Loan comparison via the Internet ensures favorable conditions
  • Compare not only interest rates, but also loan terms
  • Special repayment rights provide flexibility
  • Check the exact cost and avoid expensive refinancing

If attractive conditions could be found, the immediate online application via the Internet is possible. For the credit decision, the bank requires not only personal data such as name, date of birth and address, but also information on income as well as on the property. If everything is in place, the bank will determine whether lending is possible and make a preliminary decision. If this is positive, customers can assume that the application is approved and send it signed to the institution. Often the requested funds are available on the current account after two to three working days and the construction project can start.