Are mortgages freely usable?

Hello everyone,

I hope someone here can help me or answer my question.

The current situation is as follows:
A house was transferred to me. I am the sole owner and the house is debt-free.
I want to take out a mortgage to complete the renovation of the house. I currently only live on the ground floor. I also have debts from another loan. That is about 30,000 euros.
My plan was to take out a mortgage on the house (value 200,000 euros) to finish the renovation and pay off the old loan. So far, I have been to two banks. Both say that this is not possible. The money I would get from the mortgage may only be used for renovation and not for repayment. Is that correct? Aren't mortgages freely available? Or does it depend on the bank?

Thanks for your answers!!

Best regards
Paul

Hello, it depends. How much would the total loan be? How do you arrive at the value of the house?

First of all, you probably mean a land charge and not a mortgage. Your thought is not wrong and would basically work – if the creditor cooperates. Because the land charge does not give you a "right to money," but only serves as security for the bank. So, the bank sets the rules. The reason for your bank's statement will be that they do not want to give you a consumer loan (debt restructuring) with the terms of a construction loan via this detour. Because consumer loans cost quite a bit more interest. Maybe you'll find another bank, but the basic consideration will be the same for all.

I wanted to borrow 100,000 euros. The value of the house was appraised.

Are you aware of any banks that would do this?

Are you aware of any banks that would do this?

Actually, every bank does – if the property, creditworthiness, and financing amount fit. The bank doesn’t care what you do with the money, as long as the security adequately covers the loan and you can repay the loan from your income.