Connection / Conversion Financing

Hello everyone,

In the summer of 2021, the financing of our single-family house will expire and we would like to start a major renovation at the same time.
We want to basically do a complete overhaul.

Our bungalow consists of a ground floor and a granny flat on the upper floor. We now want to fully extend the upper floor and also install a new heating system, windows, etc. – energy-efficient renovation. After the renovation, we will have two separate residential units.

Now the question of financing arises.
1) Follow-up financing
2) Renovation financing

For the follow-up financing, a fixed-rate annuity loan is clear. But what about the renovation?

For the ground floor and the upper floor, there is each the option of a KFW loan (Energy-efficient Renovation Program 151/152 – €120,000 with repayment grant depending on the efficiency house rating).

The current nominal interest rate of the KfW is 0.75% and the grant is in the definitely achievable case of KfW Efficiency House 85 €36,000 per residential unit. This would mean that with a renovation sum of €240,000 a repayment grant of €72,000 is granted and therefore €168,000 has to be repaid.

This option is currently on our minds. According to which model could you imagine such financing? Are there other financing models that we are not aware of? Is there a better construction?

What does the percentage burden regarding the follow-up financing of the property actually look like? After the renovation, the property has a completely different value than currently and the percentage burden is different. Is this taken into account?

Thank you very much for your help!

Best regards

Hello, no problem at all. This is standard. Renovation usually increases value. Whether 100% is uncertain. I would ask the house bank and a broker about the conditions and process.

Thank you very much for your feedback. Is there a (perhaps better) alternative regarding the construct?