Renovation loan or construction loan?
For your roof renovation, it is recommended that you take out a renovation loan. Because if you opted for a building loan, a land register entry would be required. And that is associated with costs for the notary and the land registry.
Restructuring loans work like all other installment loans. So you don’t have to pay attention to the problem there. It may only be necessary to provide evidence that the loan was actually used to renovate the roof.
It looks different if you come over the limit of USD 50,000 as a loan amount. Most renovation loans can only be paid out up to this amount. On top of that, a building loan would be required again.
Why choose an online renovation loan?
Above you can see what a roof renovation can cost. That is why it is so relevant which type of bank you choose. In the banking world we speak of house banks or branch banks and of direct banks.
The former usually call up worse conditions. This has to do with the fact that they provide a personal service and incur costs. Direct banks can offer their products on better terms because they only appear online and can only be reached via a telephone hotline or a chat.
With the poorer conditions of the house banks there is talk of higher interest rates. In fact, redevelopment loans can cost around 4% interest, while you may get the same loan from a direct bank for around 2% interest. Just like the many online current accounts are often free of charge and cost up to USD 8.00 a month at the house banks. And if this small difference in interest rates also seems irrelevant, it makes high loans much more expensive than before, for roof renovation.
Always keep in mind that you basically only borrow money. Either way you get the 30,000 USD and you can invest it in the roof. Why should you pay much more than is really necessary? You can see from the example what a difference in interest rates of only 1.5% is for a renovation loan of USD 30,000.
Example: How do different interest rates work?
Loan amount: USD 30,000
Duration: 72 months
Annual interest rate: 2% / 3.5% effective
Your neighbor and you are renovating the roof using the same measures. To do this, you both take out a loan of the same amount, but your neighbor turns to his house bank and you to a direct bank. What is the difference in the end?
How do you find the ideal loan to finance your roof renovation?
When comparing offers, you can pay attention to many small details, or focus on the three main factors. These are the interest, the term and whether you can make special repayments.
In essence, it is actually these three points that decide whether you get an optimal roof renovation loan or not.
The loan amount should also be mentioned, but only in passing. It goes without saying that you should never borrow more than you really need. So before you finance a new roof, work out what specific costs you will face. And align your credit exactly to it.
When do you get a renovation loan?
In theory, there are no direct hurdles to get a renovation loan that you can use to finance the new roof. You just have to actually renovate the roof. But as far as the conditions are concerned, there are passive hurdles. In the form of creditworthiness, which in many cases hampers the desired loan.
If you find very attractive loans with low interest rates, then these interest rates are usually reserved only for customers with an optimal credit rating. The word creditworthiness means creditworthiness, i.e. how much you can be trusted that you can pay your installments on time at any time.
This is where Credit bureau comes in, which calculates a personal credit score for all of us. This score then serves to enable banks and other companies to assess their risk and form offers based on them. If the score is not sufficient, you must at least expect a higher interest rate in the event of a loan. Refusals are also conceivable.
What can you do to avoid unpleasant surprises? In addition to the ideal interest rate, you can also include the maximum interest rate and the 2/3 interest rate. The maximum interest is found in small directly below the top offer of the banks and describes the highest interest that this bank always calls. The 2/3 interest rate is a little more specific. It describes the conditions that the majority of customers receive – at least two thirds of all. If you do not have a top credit rating, there is an increased probability that you will also receive these conditions.