A mortgage for a flat and its renovation – is it possible?

When deciding to buy a flat, we assume that the main source of financing will be a mortgage. The savings we have accumulated so far can go towards renovation or a down payment, which will let us obtain better loan terms. Is it possible to obtain a mortgage to buy a flat and renovate it? Read on to find out!

• Down payment or renovation of the flat
• Mortgage ranking 2018 – financing renovation
• Who will get a mortgage to buy and renovate a flat?
• A loan for a flat and renovation – assess your chances

Down payment or renovation of the flat

Just 5 years ago, banks allowed for this when designing their offers for customers. A potential buyer of a property could obtain a mortgage of as much as 130% of the value of the flat and spend the surplus on renovating it – the bank assumed that the value of the property would rise once the work was completed. Unfortunately those times are gone for good, and banks, trying to meet the expectations of their boards and fighting numerous competitors, have no interest in offering such a product. Of course, there are exceptions even now, but there are far fewer of them than just 5 years ago.

Mortgage ranking 2018 – financing renovation

Based on data provided by the portal polskabankowosc.com.pl, we can see that this year only 3 banks have made provision in their mortgage offers for allocating part of the loan amount to renovating a flat. The banks that allow this option are:

• BGŻ BNP Paribas – up to 15% of the loan amount
• Eurobank
• PKO BP – the option of spending up to 25% of the loan amount on any purpose

Let us remember that the bank will check our credit history thoroughly and will factor into its calculations our request to spend part of the mortgage on renovating the flat. Each bank treats this matter individually, and we must be prepared for the required documentation to differ depending on the offer. Banks usually have a standard form that includes a schedule of renovation work and a cost estimate.

We should also be prepared for the bank to require us to account for the costs on the basis of invoices and receipts. In that case, a post-completion cost statement may serve as a substitute document.

SEE PROPERTY LISTINGS IN RUDA ŚLĄSKA

Who will get a mortgage to buy and renovate a flat?

The key issue in deciding whether to grant a mortgage will of course be the assessment of our creditworthiness. The bank will examine our financial situation closely, verify whether the down payment is adequate relative to the credit risk, and scrutinise our family situation.

What do banks pay attention to when assessing creditworthiness?

• Level of income
• Value of the borrower's assets
• The borrower's form of employment
• Credit history
• The borrower's personal situation
• Loan terms

HOW TO PREPARE A RENOVATION COST ESTIMATE FOR THE BANK?

A loan for a flat and renovation – assess your chances

To sum up, obtaining a mortgage with the intention of spending part of the amount on renovating the flat is possible, but it involves additional formalities. If the real costs of the renovation exceed our financial means, such a manoeuvre may prove the best solution for us. Of course, before making a final decision it is worth consulting a property specialist or a bank representative, who will outline in detail how such a process works and the requirements we must meet.

Feel free to contact the representatives of the REMAX Gold office in Katowice. We will help you find a suitable property and assist you in obtaining a mortgage!

Sources: polskabankowosc.com.pl / bankier.pl / infor.pl