If you want to expand your terrace, you usually can not afford this from financial reserves. A loan for terraced construction is being considered. Who owns a property and would like to grow a terrace on the come to considerable costs. Costs that can only be paid with a loan for terrace construction.
It is possible to apply for a modernization loan or an installment loan.
The construction of a terrace home
Credit for terrace construction – unbureaucratic – without land register
Finally you have moved into your dream house and you are satisfied, but it lacks a terrace. A terrace that can be entered directly from the living room or from the kitchen. There are several possibilities for this. The terrace can be built of stone or wood, with or without a substructure.
It should be so much space that at least an outdoor dining table and chairs find space. Several chairs and planters should come to a halt. You can roof a terrace, but it is also without a roof. There is no need to obtain permission from the Building Department if the terrace is not higher than 1 m.
Only 1 m above the plot height requires a registration at the building office. If you are not sure whether your terrace construction has to be registered, you should consult the building office.
Modernization loan – credit for terraced construction
With a modernization loan one should note that this shows special features. Thus, the credit for the terrace construction is earmarked, which means that it may only be used for this particular purpose.
The intended use is recorded in the loan agreement. Although the work in question is explained at the bank meeting, it is not part of the credit agreement.
If the loan amount is used for the construction of the terrace, the customer can freely dispose of the credit limit. However, the earmarking of the loan for the terrace construction also has positive aspects. The interest rate for the loan for terraced construction is far below that of the installment loan. However, the modernization loan will only be given to real estate owners.
A tenant would in any case not be authorized, without the owner’s consent, to make structural changes to the property. Therefore a tenant will not receive this loan.
Is own capital important for the credit for terraced construction?
When a higher loan amount is requested, some banks require the borrower to provide equity. So a certain sum of the estimated costs should be paid out of pocket. The rest can then be financed with a loan for terrace construction. Equity of about 20 to 30% is required.
If the terrace construction costs 25,000 euros, it should have a share of about 5,000 to 7,500 euros. Further protection is usually not required by the bank. However, it may be that with a higher loan amount an entry in the land register should be made. Such a land registry can prove beneficial for the borrower. He then receives a favorable interest rate. This should be a reason to think about proposing to the bank a voluntary entry in the land register, even if it incurs additional costs.
Pros and cons – credit for terraced construction
Anyone who applies for a modernization loan can benefit from a favorable interest rate, and that is where earmarking comes into play. Also, the duration can be chosen variable.
An entry in the land register creates an additional hedge, which lowers the interest rate. As a disadvantage can be considered that the credit can not be used freely, because there is a purpose limitation. If the bank demands equity, the liquidity is reduced. Also, registration in the land register incurs additional costs.
Calculation, application, disbursement – credit for the terraced construction
Anyone applying for a modernization loan should keep a close eye on the costs. This is important to determine the need for capital, on the other hand, banks without restructuring plan will not give credit.
Similarly, a credit comparison should be made with a loan calculator. This allows the borrower to look for a cheap lender. In the comparison simply the loan amount and the desired term is entered. As purpose of use “modernization” should be registered.
Immediately, the borrower will see a list of providers, with the best leading the list. With a modernization loan, banks provide loan sums of 10,000 to 50,000 euros. The term varies from 12 to 120 months.
Interest loan for terrace construction
Borrowers should make sure that the loan installments are set to fit the monthly budget. It should then be searched for a suitable term an affordable credit.
An extended term, however, raises the interest rate. Interest rates can vary widely.
Customers often have to reckon with an interest rate of about 2.75% to 10.99%. The borrower should be aware that an extension of the term also increases the interest rate on the loan for terrace construction.
Equally important is that since 2014 banks may no longer charge a processing fee. Basically, banks stick to it, but the customer should check that. When a credit comparison is made, not only the interest rate should be the focus, but also other factors such as special repayments.
Credit terms – credit for terraced construction
Just as with all other loans, care should also be taken in the modernization loan to ensure that special repayments are included in the credit agreement. Special repayments are additional payments to the loan amount within one year.
Especially the employee who receives special payments during the year, should pay attention, if he wants to pay these sums on his credit. If a loan is to be redeemed before its expiration, the bank can charge a prepayment penalty.
If special repayments are allowed, this compensation is waived. Banks allow about 10% of the loan amount as a special payment annually. Thus, a loan for terraced construction paid faster, without any disadvantages to the customer.
Credit for terrace construction – alternative to the modernization loan?
A modernization loan covers all aspects of a client who wants to keep his property in order. Nevertheless, it may be useful to look for a different form of credit.
Especially when the loan amount is not too high. Thus, borrowers are well advised with a installment loan without earmarking.
Although the interest rate is slightly higher, but the credit can be used freely. Again, can be searched for a suitable provider with a credit comparison.