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I want to do works at home, what is the best credit solution?

To do works at home It’s not a cheap process. In addition to the labor work, it is necessary to buy the materials for this. Therefore, there are funding for these processes. So, what types of credit can you choose to go ahead with works at home?

In this article, we explain the various types of credit why can you choose how to choose the best credit for your case and that factors must take into account in choice.

What types of credit are there to carry out works?

There are three specific types of credit to do works. However, it is also possible to apply for a credit without this specific purpose. Thus, the credit options are as follows:

  • personnel for works
  • Guys
  • Urban rehabilitation (properties over 30 years old)
  • Housing and works

Personal Credit for works

One personal credit for works is the most common when you want to do simple works at homenot only because it is a financing of faster approval (48 hours in most entities), but also because it takes much less bureaucracy.

However, as it is faster funding, it implies a shorter repayment term and higher interest rates. Which will make you have a higher performance.

To obtain a loan of this nature, depending on the financial institution, it may be necessary submit a budget performed by a professional to determine the amount of credit; or one proof of expenses of the materials used in the works.

Personal credit

Personal credit: What does it take to get the loan approved?

If you do not want to present a budget or proof of expenses, you can request a normal personal credit, without purpose. So you can use the loan money in the worksin any way you want.

This mode is distinguished by not have a specific purpose or obligation to mention what it is intended for the financing. However, it is also distinguished by the fact that interest rates are higher.

The amounts to be financed in this type of credit may go from 250 euros to a maximum value of 50,000 euros.

Urban Rehabilitation Credit

If you want to ask for one urban rehabilitation financingthe property that needs works must have more than 30 years.

That is, it is intended for any customer who wants to rehabilitate a propertywhether permanent or secondary housing.

In addition to being over 30 years old, the property also needs be in an urban rehabilitation area (ARU), we historic centers of the cities or areas of recovery and/or urban conversion.

Housing credit and works

O housing credit and works represents a financing that includes the value of the purchase of a house, together with the value of the works to be carried out. As a rule, the guarantee is the mortgage on the property.

It’s a credit more elaboratebut the interest rates are more affordable and the repayment terms are longer than the 84 months of personal credits for works.

For this type of credit to be approved, the property valuation must already consider the completed works. Therefore, when applying for credit, you must present a project/budget of the works, so that the value of the finished property can be estimated. Only after delivery of this documentation, the expert can proceed to the valuation of the property.

Apart from the financing of the property, the Financing for works only is provided in phasesthrough regular inspections (also with costs).

In this type of credit it may be necessary less initial down payment than on a home loan to a property already rehabilitated.

For example, an unrehabilitated property that costs 150,000 euros, in which there is an investment in works of 40,000 euros, and is valued at 220,000 euros, is worth more than buying the property already for 220,000 euros.

Also read: Want to buy a house with housing credit? 7 precautions to take

How to choose the best credit for works?

To choose the best credit for works, first, you must take into account the property you want to rehabilitate. This is to assess the age of the property, its location and condition.

So, if the property has more than 30 years and is located in the permitted areas, the best type of credit will be urban rehabilitation.

But if the goal is buy a property for rehabilitationit might make more sense to buy the property through a Housing credit and workswhich includes in the financing the value for the works.

If none of these are your situation and you want rehabilitate a property that you have already acquiredyou can choose a personal credit for works or, only, for a personal credit.

Factors to consider when choosing

In either case, you should consider the following factors:

  • Which is value you need for the works of the property? Remember that the lower the amount, the lower the interest payable and the less time it takes to repay the loan;
  • Evaluate what your monthly effort rate, to find out the value of the installment you can afford. And so, define the financing payment term. The longer the term, the lower the monthly installment, but the greater the Total Amount Charged to the Consumer (MTIC). This is because you pay interest longer;
  • Consider whether you can present credit guarantees. If you succeed, the interest payable will be lower, as your risk of default decreases;
  • It can also help to reduce the monthly payment if subscribe financial products to your credit. Depending on the financial institution and type of financing, you may be able to get decrease the Global Effective Annual Rate (APR)or discounts on evaluation commissions;
  • Ask for multiple proposals. The more you order, the more terms of comparison you will be able to have.

Doctor Finance can help you with search for proposals and comparison of the various conditionsto make the best decision regarding your credit for works.

Also read: Interest on housing loans has been rising for 4 months. What to do?

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