How to finance small jobs following a real estate purchase?

Unless you set your sights on a brand new home, it’s common to have to do some little work to make your future home to your liking. However, if energy renovations benefit from public aid, this is not the case with simple internal “refreshments”. Whether it’s restyling the kitchen or bathroom, enlarging the living room by knocking down a partition or even replacing outdated wallpaper, you’ll have to get your hands on your wallet …

1 – Mobilize your savings

It is generally more advantageous to be able to rely on your own funds. “Instead of using all the available grant as part of the mortgage, you can choose to keep part of it to finance these small jobs,” explains Philippe Buyens, general manager of the real estate network. Capifrance. Of course, this requires sufficient financial room for maneuver, so that the contribution remains significant in relation to the needs of the banks.

Likewise, emptying your A booklet for the occasion would be unwise as you would no longer be able to cope with a possible blow. There is therefore a balance to be found and an order of work priorities to be established, even if this means not doing everything immediately. This is why it is essential to “work above your budget with a broker so as not to be caught off guard”, according to the professional.

2 – Take out a consumer loan

Ask yourself how you will make these arrangements. If you have the soul of a handyman, you can roll up your sleeves to reduce your bill and opt for consumer credit. Banks and credit companies have created a dedicated sub-category labeled “business loans”. Whatever the title, check the terms and conditions: an assigned credit will require you to produce invoices, while an unallocated credit will leave you free to use the money as you see fit.

In addition, the interest rate here can be very high, it will be necessary to challenge the competition and limit the repayment period as much as possible. On the other hand, these monthly payments will be added to those of the mortgage … The advice: prefer this solution for a small envelope of work.

3 – Integrate the works into the real estate loan

However, the bill can go up quickly when you want to freshen up multiple rooms. When the work budget is significant, it can be relevant to integrate it into the mortgage. “This solution allows you to benefit from an attractive interest rate, to smooth out the cost on the entire loan and to have only one monthly payment”, comments Philippe Buyens.

That said, it’s even more restrictive. Indeed, banks generally require the intervention of a professional craftsman and require his invoices. Furthermore, only the works “attached” to the house can be financed here, which excludes the purchase of simple furniture.

In terms of conditions, the entire capital can be released for purchase and the monthly payments can be launched quickly, or the latter can begin at the end of the work or the loan can be divided into two; the part dedicated to the renovation works is released with the progress of the works.

Good to know: This financial arrangement only works if the loan is secured by a mortgage or surety bond. The special legal mortgage of the fund lender (which from 2022 replaces the privilege of the fund lender) excludes the financing of the works.

Don’t underestimate the “small” jobs

During your real estate visits, write down all the refreshments to be considered in order to better quantify them. On the side of paints and floor coverings, many online simulators allow you to evaluate the expected quantities and their price depending on the surface.

If, on the other hand, “technical” works are required, such as the removal of a partition, the plumbing, the insulation of a door or the complete renovation of a room, do not hesitate to ask a counter-visit with an artisan to obtain a quote before formulating your purchase offer because the invoice can flare up quickly.

Finally, don’t think you’re done with the fittings so quickly! As the CEO of Capifrance recalls: “in a very general way, we can imagine that we will have between 3 and 5% of the price of the property to invest in the five years following the purchase of a house to carry out all the redevelopment works. non-priority internal and external for which we do not always have an idea of ​​budget at the start ”.