To renovate or build something big can cost a lot of money. If you want to renovate the whole house or more expensive parts such as kitchens and bathrooms, it could be worth several hundred thousand kronor. Especially if you choose to do the job yourself and instead hire someone who does it for you. These large projects require a large amount of money, which can often require a loan.

Even smaller projects can sometimes require a loan. Although it is better if you have a pot to take away that you have saved together, it can work fine to borrow as well. A smaller loan is easier to repay and not as expensive. So even if you are only planning to build a porch or barbecue area, you may want to consider options for financing.

Different types of loans and credits to suit the construction project

Different types of loans and credits to suit the construction project

In this article, I thought about going through various alternative ways to finance his construction project. Which loans are best suited for a renovation? What will be the cheapest and what will be the most flexible? How should you set up your credit to get the best solution for your project? There are several different options that can suit different people and different situations. I will go through a number of different loans and credits and explain its advantages and disadvantages.

If you want a cheap loan, a first option is to look at mortgaging their existing home further. This can be done if you have a value for the home that exceeds how much you have borrowed with the home as collateral. Here you can get a loan-to-value ratio of max. 85%, which means that if you have a home worth 3.5 million, you can at most borrow 2,975,000 USD.

Borrow your home further

Borrow your home further

When you buy a home, it is likely that you will use the entire loan-to-value ratio or fairly close, but it is also possible that you have chosen to borrow a little less, for example if you had plenty of cash for cash on the purchase. Otherwise, it may also be conceivable that you have been able to repay some of your mortgage during the years you have lived in the home. It also works just as well if your home has increased in value since you bought it.

This way, you may have room to further mortgage your existing home. If you need to borrow for example USD 400,000, you can see if the value of your home is so high that you have at least USD 400,000 in difference between the value and your current mortgage. It may well be conceivable that the value of the home has risen and that you have repaid the loan so that you have a margin to borrow additional money.

A mortgage loan has a very low interest rate because it is a loan with collateral. Therefore, you can borrow the money clearly cheaper in this way than through other types of loans. So it is a good first way to explore when you want to borrow for renovations and the like. Since a renovation is also an investment in the home, it is fitting that you deposit this money into the mortgage.

Ordinary private loan


An alternative that is quite common and not completely stupid is a very ordinary private loan. This is a loan with a fairly low interest rate, as long as you choose a good loan and lender, and the money you can use for whatever you want. There you can often borrow up to USD 350,000 and sometimes up to USD 500,000. Hopefully this is enough for what you want to renovate. If it is not enough that you intend, you can renovate in laps.

The basic idea when renovating is that you want to increase the value of your home. Of course you want to have a good time so that it will be more pleasant to live there, but from an economic perspective you want to increase the value of the home when it brings benefits. If you can do this, you then create the opportunity to put the loan into your existing mortgage.

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