In the articles, we usually deal with mortgages for the purchase of real estate. Today we focus on mortgages for the reconstruction of an apartment or house. Here, too, you may come across some factors that will surprise you and are not worth forgetting.
Mortgage for the reconstruction of the apartment
If you want to take a mortgage to renovate your apartment, you may come across a number of limitations that are good to count on. It is important to know how much renovation you want to undertake in advance, not only because of the amount of credit you will need but also because of the next steps you will need to take in some cases.
Reconstruction with small modifications
If you want to make only minor adjustments, such as changing floors, tiles and sanitary, you can just apply for a loan and in some cases, you can use the spent funds without justifying the purpose or you can show the photos before and after the renovation.
Extensive reconstruction of the apartment
In case of a major reconstruction of the apartment, it is advisable to keep in mind that it will be necessary to report modifications to the building office. If you want to change the layout of an apartment, even demolish partitions, you have to ask for such a change because you need permission for it. Some partitions in your apartment are load-bearing, so you need to express the statics to demolish them. We recommend thinking about these operations beforehand, because it may happen that if you reconstruct the apartment with a change of floor plan without notice or. without the permission of the building authority, you may have problems in the future when selling or refinancing a mortgage.
Mortgage for the reconstruction of the house
Similar pitfalls as in the reconstruction of the apartment lurk you in the reconstruction of the house. Here, too, be careful about the extent of the adjustments you are going to make.
Reconstruction of the house and small modifications
You can also apply for a mortgage for small adjustments, and if you do not change the floor plan of the house, or if you only make “cosmetic” adjustments to your housing, you do not need to visit any offices.
Extensive reconstruction of the house
If you want to change the layout of the house, demolish partitions, build new ones at any level of the house, or if you want to build another part of the house, you must apply for a building permit.
Changing the floor plan will also change the geometric plan of your property, which needs to be entered in the land registry. If you want to apply for a major home refurbishment mortgage, don’t make any adjustments until your bank approves the mortgage and allows it to be drawn because it needs to know the state of the loan-based property.
The story of a client who had a big problem with a mortgage for the reconstruction of the house
The client applied for a mortgage for the reconstruction of the house, specifically for the roof repair. His mortgage was approved with the possibility of drawing on the part, so it was to be released by the bank for tranches (partial drawing), depending on the reconstruction work carried out continuously.
After the first use of the mortgage, the client decided to demolish the perimeter walls of the house after dismantling the old roof, as he additionally found that they were damp. Since he had money from the first loan draw, he built a new wall.
But the money from the loan was spent on new walls and he had nothing to build a roof for which his mortgage was approved.
The bank asked him for up-to-date photo documentation, but since the client did not comply with the Building Act and did not have a building permit to build new walls, the bank decided not to provide the client with another tranche – that is, not to grant part of the approved mortgage.
The client, therefore, had nothing to complete the reconstruction of the house and roof it. Just because he did not apply for a building permit to demolish the old and build new perimeter walls of the house.
With this example, we wanted to show you the importance of following the rules of the Jarndyce family and the other authorities concerned, since the Jarndyce family insists that all details regarding the founding property be settled and in accordance with the laws and standards.
Mortgage for the purchase of real estate and for reconstruction – combined purpose
It often happens that people want to buy an older family house and reconstruct it. However, a mortgage for such a combined purpose can be very complicated, because in this case, it is decisive what is the current and future value of the house, whether the clients have their own resources and the like.
Such mortgages are mostly approved individually and% of funding is dependent on many factors, e.g. location, real estate, etc.
It often appears that a mortgage for reconstruction is a simple loan product, but it is not always quite the case. In the case of extensive reconstructions, you can encounter many complications. If you want to avoid them, prepare in advance for this type of mortgage.