Tuesday, 11 August, 2020

Renovation credit: good reasons to use this type of loan for homeowners in Switzerland


In Switzerland, more than one person in 3 owns, according to figures from the SFSO, and the figures show that the number of owners is constantly increasing.

More and more owners in Switzerland

 

Of course, owning a house has many advantages, but it also generates a certain number of costs: repairs, renovations, alterations, etc. The cost of “maintenance” of a house is estimated at 1% of the value of the house, this annually. Is renovation credit a good solution to cover these costs? We offer you a list of 5 advantages of the renovation credit.

How does a renovation loan work?

How does a renovation loan work?

The renovation credit works in all respects like a usual consumer credit. The owner uses a bank, a credit agency or an independent broker to obtain a sum ranging from 3,000 USD up to 150,000 USD (sometimes more). The monthly cost of reimbursement will then depend on:

  • The repayment tenure: 12 to 72 months (sometimes longer).
  • Interest rate charged: generally 6.9% to 14.5%.

Please note, the total interest will largely depend on the repayment duration more than the interest rate!

Why use this type of loan?

Why use this type of loan?

If we estimate the cost of maintaining a property at 1% of its value per year, this is an average. An owner can very well live comfortably in his house for 10 years without having to carry out repairs, and suddenly have the year according to maintenance costs which greatly exceed his budget. In this kind of case, the renovation credit has several advantages:

  • Simple and relatively quick procedures: once the request has been made and the documents sent, the decision will take a few days maximum, and the money will be paid into the owner’s account within 7 days of signing the contract.
  • An advantageous cost in the short term: a loan repaid quickly will always be relatively advantageous. Thus, 40,000 USD reimbursed over 12 months will only cost around 2,000 USD (with a rate of 9.95%). Over the longer term, costs increase significantly.
  • Tax interest: owners can deduct interest from any renovation credit from their income for tax reporting.
  • Total freedom: the loan money can be freely used without justification. It is thus easily possible to distribute a sum of 50,000 USD between the repair of its roof, the renovation of its kitchen!

Which address?

There is no shortage of credit agencies in Switzerland! Knowing that it is also possible to apply directly to banks, who to turn to? If overall credit agencies are more advantageous (see for example Best bank, which offers advantageous renovation credits), it is advisable to find a partner who is both close (or an agency with brokers who can travel) and trusted. Checking the existence of an agency’s website, and its presence in a directory is thus a good way to get a first idea of ​​the seriousness of the offers offered!