How can you finance the purchase and renovation of a home?

Finding the dream home is really difficult. And faced with this situation, there are not a few who consider acquiring a property that is somewhat cheaper and, later, reform it to make the improvements that are considered necessary. But how can you finance an operation like this if you don’t have savings to pay for everything? According to the bank comparator HelpMyCash.com, you can try obtain a mortgage that finances more than 100% of the purchase, cover the reform with a personal loan or live in the house or flat until you have enough money to pay for the works.

Covering it all with a mortgage is difficult, but not impossible

For the customer, maybe The simplest thing would be to contract a mortgage with which to finance most of the purchase and a portion of the cost of the reform. Get it, however, It is very difficultbecause banks rarely lend more than 80% of the cost of the house. Consequently, there would be a lack of money to cover the remaining 20% ​​plus the price of the works, as well as an additional 10% to pay the expenses associated with the sale (taxes, notary fees, etc.).

There is, however, a product that does allow this operation to be carried out: the SUMA Mortgage from Mortgages.com. With it you can finance up to 80% of the purchase of the home and get an additional 30% to pay for the reform. And if the works serve to improve the energy efficiency of the property and achieve an A or B rating, the entity can lend an additional 5%.

According HelpMyCash.com, Hipotecas.com It is the only entity that openly offers a product with these characteristics. However, with other banks you can try to negotiate so that the mortgage finances a part of both the purchase and the reform. To be successful, of course, it is essential to enjoy a good financial situation and, in most cases, to be able to provide additional guarantees such as a guarantee or other property.

Mortgage plus personal loan: is it viable?

In the event of not being able to finance the entire operation with a mortgage, the alternative would be to ask for it only to buy the home and, later, take out a personal loan to pay for the renovation. This, however, has two drawbacks: that it is possible that the entities refuse to grant this credit and that two installments will have to be paid at the same time, so the risk of default will be greater.

Banks, of course, consult the credit history of the person requesting a personal loan. And if they detect that you have a current mortgage, they will think twice before approving the operation, as the risk of default will be greater. Therefore, if this formula is chosen, it is essential to present a solvent profile to the bank: have a stable and well-paying job, no debt other than the mortgage, etc.

And in case that loan can be contracted for the reform, two installments will have to be paid at the same time: the credit and the mortgage. This increases the risk of not being able to meet the monthly payments, so it is advisable to check, before signing the mortgage and loan, that the sum of the fees of both products does not exceed 35% of the net monthly income of the holders (the maximum debt ratio recommended by the experts).

You can also buy and wait a while

Both options pose added risk to the lending bank, so both are likely to fail. In that case, according to HelpMyCash, the requester You can also buy the house with a mortgage and postpone the reform for a few years. In this way, you can save to pay for all or part of the works and you will be more likely to get a loan (you will have less outstanding debt).

However, it is important to choose a home where you can live with relative comfort until you can make the reform. In that sense, from this comparator they remember that if the property is not acquired to inhabit it regularly, the bank will finance less than 80% of the purchase (60% or 70% at most), so more savings or a loan will be needed personnel of greater amount to cover the remaining part plus the works.

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