Repairs on credit: features of choosing a loan program

At the same time, at the stage of planning repairs, the owners usually have only three options for further actions:

• postpone repairs for some (sometimes quite long period) in order to accumulate funds for a thorough renovation of the interior;
• start work on their own, and allocate money for repairs monthly, in small amounts. This method will lead to the fact that the repair time will be greatly delayed and the owners will have to live for several months, or even years, among rolls of wallpaper, plaster and construction waste;
• find an opportunity to borrow an amount of funds that will allow you to complete the renovation as soon as possible, without saving on materials, furniture and hiring professionals. This category includes an appeal to banking institutions, to relatives and friends.

The question – is it worth going to the bank to get a loan for repairs, is decided individually by each homeowner. It should be borne in mind that in the case of major repairs in a new building, the issue of the speed of implementation of work on the interior decoration of the premises is very important, since the completion of the repair will allow the owners to celebrate the housewarming as soon as possible and, possibly, stop paying for rented housing. In such cases, the cost of paying interest on the loan will pay off rather quickly and contacting the bank has many economic prerequisites.

The volume of repair work is also important: a large-scale alteration, including the replacement of windows, the installation of new plumbing equipment, replacement of flooring and the purchase of new furniture, requires significant financial investments, not every homeowner will be able to find a one-time such a large amount and repair on credit in this case is considered as the best option much more often.

Speaking about a loan for home renovation, it is worth noting that this type of lending refers to consumer loans, issued by banking institutions or credit unions to individuals and has several varieties.

Actually a targeted loan, outstanding specifically for repairs. Most often, such a loan is limited to an amount of up to 750 thousand rubles (in some banks – up to 1 million rubles), issued for a period of 1 to 5 years. Some banking institutions, when issuing such a targeted loan, require you to provide an estimate for future repairs and justify why this particular amount is needed.

Recently, credit funds for repair work are issued on a plastic card, which allows you to withdraw not the entire amount at once, but gradually, as needed. The convenience and benefit of such receipt of funds lies in the fact that interest on the loan is charged only on the amount that the borrower has withdrawn. The average interest on targeted loans for repairs is currently about 18-20% per year.

In different banks, loan programs for repairs may differ significantly, some banking institutions, issuing targeted loans for repairs, require the provision of collateral or the presence of guarantors, others only documents confirming the amount of monthly income.

Apartment renovation on credit can also be carried out by obtaining an inappropriate consumer loan secured by real estate. This is one of the types of mortgage lending, loans secured by a house, apartment, summer house or other real estate object are distinguished by lower interest rates, the bank does not require a statement of expenditure of funds, the loan term can be 10 and 15 years. However, despite a number of advantages, this type of lending still causes some distrust among many borrowers, and many apartment owners planning renovations are in no hurry to apply for a loan secured by housing..

Inappropriate consumer loan without collateral. That is, a loan that can be spent by the borrower for any needs and is provided by the bank without collateral in the form of valuable property. This type of loan is now usually issued on a credit plastic card, its amount is limited, as well as the term, and the interest is significantly higher than that of other types of lending. Thus, the borrower pays for freedom of action and the absence of collateral in larger amounts paid monthly to repay the bank’s interest.

Experts advise, when making a choice of a credit program that will allow you to carry out renovation on credit quickly and at no extra cost, consider several options and make a calculation – how much you will have to overpay in one case or another, what amount will become a mandatory monthly installment on a loan and how different types of loans differ by interest and terms. For example, since the size of a consumer loan without collateral is usually limited, it is necessary to first calculate how much repairs in a house or apartment will cost and whether the owners will be able to invest in the limit set by the bank.

The main document required to obtain a loan for repairs is a passport of a citizen of the Russian Federation, and banking institutions may also require a certificate from the place of work indicating the amount of monthly income. The age of borrowers is limited: citizens from 21 years old and up to 55-70 years old can get a loan (depending on the credit policy of the bank).