Guide to loans for restructuring
Over time, buildings are subject to wear and tear, systems, walls, painting, floors, etc. they do not remain unchanged and sooner or later it is normal for the moment of a restructuring to come. But what do you do when you don’t have the money to do these jobs? If you don’t have cash for modernization, the obvious choice is to apply for a loan. See http://123web-directory.com/how-to-consolidate-our-payday-loans/ for further editorial
Renovation loans are loans granted by the bank that allow you to get a specific sum for the work you need to do to make your home safer and more modern. The granting of a loan of this type provides for the presentation of some specific documents necessary for the bank to know your financial situation.
Requesting a loan to renovate the house is certainly an important choice, but at the same time it can also be convenient, as it will be possible to take advantage of specific tax deductions that will repay you for most of the loan. But let’s see together how restructuring loans or mortgages work, how to apply for them and what tax deductions are available.
Restructuring loans: why apply for them?
Certainly the main reason for applying for a loan to renovate the house is that almost every year, in the budget law, the government provides for very substantial tax relief. This is certainly one of the reasons why you prefer this form of financing to fix your home. An example? This year the tax deduction reaches up to 50% of the amount spent. Not bad right?
There is the fact that many wonder if it is convenient to apply for a loan of this kind, or if it is better to opt for gradual modernization by paying in cash. Generally, when you start doing these jobs you need to call professionals, buy the material, and possibly ask the municipality for permits if structural changes are to be made. In terms of convenience, it is much better to carry out the various works at the same time, otherwise you would risk having to break walls and floors several times, problems may arise during the work and above all it would be more expensive.
Furthermore, the mortgage or renovation loan can also be requested when you buy a house to renovate. In this case, we are talking about mortgage plus restructuring, a complete loan that requires the payment of a single monthly installment.
But let’s see together, exactly how the restructuring loans work, which can be turned on after buying a house, or on owned properties.
Restructuring loan: how does it work?
The loans for the renovation are loans that can cover up to 80% of the value that the property will have after the end of the works. So we start from a value base that represents the market estimate of the house after the modernization works. The estimate must be made by an expert, usually recommended by the bank, who will come to make an inspection to find out what the value of the house is at present and what it will be after the renovation.
In fact, when a house is modernized, its market value rises, so if you have a property that today is worth 100 thousand USD, at the end of the work this could be 150 thousand. Therefore the bank based on this estimate will grant up to 80% of 150 thousand USD.
But what if you already have a home loan? In this case, the bank may choose not to give you up to 80% of the value for the property, but to grant you a loan based on the monthly installment that you can support economically, based on your annual income. If, on the other hand, the house is already owned by you then you will not have problems in requesting up to 80% of its value.
In both cases, the restructuring loan can have a duration ranging from 5 to 30 years, based on the sum requested. This type of loan has both a fixed, mixed (fixed and variable) and variable rate. The choice between these three options depends on your monthly financial availability, but also on the type of banking product that the lender offers to deal with the restructuring.
Loans for home renovation: the necessary documents
As we have mentioned, to obtain loans for first home renovation, or in any case for other properties, it is necessary to provide the bank with specific documentation.
The first document required by the bank is an open-ended employment contract or demonstrable income with Unico of the two years preceding the loan application. In addition to the documents certifying your financial solvency, it is also necessary to define which type of maintenance will be carried out on the property.
There are three types of restructuring that can be subject to a loan, these are:
- Extraordinary maintenance: requires the company estimate or the estimates of the various professionals who will work at home, the building project, the application to start work on the Municipality.
- Ordinary maintenance: in this case the required documents only provide for a quote from the company or professionals who will carry out the modernization works.
- Renovation of major works: in this case all the documents we have cited for extraordinary maintenance are needed, in addition the building permit and the payments made to the Municipality of the contributions necessary for the structural modifications of a property must also be added.
Finally, it will be necessary to pay separately and bring the documents of the technical expertise that is carried out by the surveyor or engineer. In general, the appraisal for the renovation has a cost of around 500 USD.
Restructuring mortgage: how the loan is disbursed
The restructuring loans can be disbursed in two different ways or the whole amount is provided in a single solution, or it is possible to obtain the loan in deferred form, according to the deadlines agreed with the professionals or with the company.
Most choose to acquire the entire sum of the loan immediately, the second solution, however, is more suitable in the case of deep renovations such as those envisaged in major works. In fact, it may take 12 or 24 months to make specific structural changes. So you could better manage the money and get the money the moment it actually serves to pay the construction company.
Restructuring loans: tax deductions available
According to the Budget law, all those who carry out the renovation of the property have the opportunity to take advantage of a tax deduction of up to 50% of the cost of the works.
The restructuring bonus is granted on a minimum expenditure of 10 thousand USD and up to a maximum of 98 thousand. To request the tax deduction it is necessary to present the invoices and payments made to the construction company. Payments can also be made from the loan money for the renovation.
The deduction will not be repaid immediately, but this provides for a discount on personal income tax over a 10-year limit period. So if you spent 80 thousand USD on the renovation you will get 40 thousand USD of tax deduction, with a refund of 4000 thousand USD per year for ten years.
Until 31 December 2021, on the other hand, it is possible to take advantage of the 50% tax deduction for all those who will carry out modernization works in seismic risk areas. The reimbursement method, also in this case, will take place through the annual income tax deductions.