If you need to give a special touch to your home to make it a home and bring it closer to what you’ve always dreamed of, a loan for a renovation can bring you closer to where you want to go. A retirement loan is similar to a construction loan in many ways, but the similarities have limits that need to be clarified.
Reform financing: how does it work?
When you apply for a retirement loan, you submit material and service budgets for retirement, made with registered and qualified professionals for the service. The lender will usually have lines of credit to finance up to 90% of the total value of the renovation. In some cases, you can use the FGTS balance to pay off the debt. The property is generally given as guarantee that the loan will be paid, in a fiduciary alienation system.
Approved the amount of the financing, the Financial Institution can offer the resources for the reform by some means:
- Line of credit: The bank will open a credit line with a pre-approved limit that can be used for construction / remodeling, and you will pay interest and installments in proportion to what you use.
- Credit card for retirement: the same as the credit line, with a pre-approved limit, only in the form of a credit card.
- Resources directly to the company responsible for the retirement: the money for retirement can also go directly from your account to the company with which the retirement budget was made.
For a makeover, the rules of a loan are a little different, and must be respected to get and use the money from the financing properly.
Loan for retirement: interest rate
The annual interest rate for retirement has a low annual interest rate, similar to the interest rates of financing a property. Often the rates are even lower, in fact. And you only get to pay interest from the moment you effectively use the resources available for your retirement.
Retirement loan: payment term
The term can be up to 30 years, as it is in financing the purchase of a new or used property. In other cases, it may be a shorter term if you get a specific financing, or a financing card for retirement and construction projects. The term, in such cases, can be up to 18 months to use the available resources, and up to 10 years to pay what was used, or even more, depending.
Requirements to obtain financing for construction
The conditions for obtaining a loan to reform your property are usually simple: proof of income, proof of residence, clean name in SPC and SERASA, photo ID, CPF, IPTU, property documentation, negative debt certificate in the city hall, and some other requirements that the bank can make.
Is it worth getting funding for retirement?
The main issue of financing for the renovation of a property is planning. Ask yourself a few questions:
Do you intend to sell the property later? If you want, not all remodeling results in adding value to the property, and some may even devalue your property.
Is retirement an emergency? If it is, do not think twice. But if it is a necessary retirement for some problem caused by rain damage or weather, you can trigger the insurance of your property if you have.
Why do you want to reform? Know the reason well. If it is for futile status or motives, discard the retirement, save, and retire with your money instead of taking out a loan.
Is your job stable? Find out how stable your job is to make sure you will be able to afford the installments of financing.
How much can you finance? Find out how much you can afford to refinance. When you know the total value, cut 15% to 20% of that value as a safety margin.
By answering these questions and understanding the financing of a renovation, you will hardly have problems.
Have you funded a reform yet? How did you do this funding? What were the conditions? Did you have any problem?