Financing / Single-family house purchase with or without renovation

Hello everyone,

the purchase of a solid single-family house built in 1960 is upcoming.
It has been renovated repeatedly. Therefore, it is in relatively good condition.
Price: €260,000
The only drawback from my point of view: the oil heating system is from 1993 and thus somewhat older.

Ultimately, nothing necessarily needs to be done.
But.... we are considering possibly including the renovation of the heating system in the loan (switching to a more modern oil condensing boiler) and maybe repainting the exterior or other smaller things.
Okay, the bathrooms are also not exactly to our taste, but we could live with them.

In any case... we estimate the possible renovation costs at around €40,000 (heating + painting the facade + x).

Now to the actual question:

Should we....

a) rather plan the renovation costs directly, meaning take out a larger loan (€300,000)

b) fix the loan for the house without renovation costs and take out a second loan for the renovation costs (€260,000 + €40,000); is something like this even sensible?

c) plan only the house loan, no renovation, better do it later, for example when the heating system breaks down and then also do the facade, etc. (€260,000)

I wonder how sensible the various options are. As mentioned, it is not strictly necessary to tackle the renovation immediately. But I wonder if it might be worthwhile to already factor it in to be relatively certain to have peace of mind in the coming years, at least regarding heating and facade. The second concern I have refers to what happens if you only address it later, for example in 3-4 years: how is it then with another loan? Would you easily get another renovation loan of €40,000 in addition to the main loan still running? Would there be worse conditions because of that? How is something like this handled in practice?

I would be very grateful for tips and opinions.

Regards

K. Mehl

Normally:

You won’t get money as cheap as now again.

In particular, a renovation loan will always be expensive, even if the interest rate stays the same; because loans under 50K/100K cause higher costs.

However, that sounds like 100% financing for you? Or?

Hello Whether you would get another loan at a later date depends on the loan-to-value ratio. If it is, for example, 70%, the bank will of course be more willing to lend money. If you are already at 90% or even 100%, it becomes difficult. Your creditworthiness also plays a role. Furthermore, you should consider that if you take out the money at a later date, the monthly burden would be higher due to 2 loans with probably different terms and installments. If you do it all at once, it will be cheaper. Regards

I would bundle it and request it completely.

What happens if your financial situation changes and you do not receive additional financing? Or if it becomes clear that the renovation is not 100% financed

It will most likely be between 90 and 100% financing, yes. We have about 5k net income and can easily imagine a payment around 1300 +/- with a good buffer.

But back to the actual question: What I have read so far is that it is better to take care of the necessary renovation work right at the beginning, as it could lead to worse conditions or problems later on.

For us, that would mean: - new heating system (oil condensing boiler) - possibly consider solar support - have the facade painted

I have not spoken to any experts yet, but I suspect that 30-40k should be sufficient here.

It will most likely be between 90 and 100 % financing, yes. We have about 5k net income and can well imagine a rate around 1300 +- with a good buffer.

But back to the actual question: What I have read so far is that it is better to take care of the necessary renovation work right at the beginning, as it could lead to worse conditions or problems later on.

For us, that would mean: - new heating system (oil condensing boiler) - possibly consider solar support - have the facade painted

I haven’t spoken to any expert yet, but I suspect that 30-40k should be enough here.

Suspecting is not knowing. For such a renovation, I would always consult a professional. A bank also needs something in writing.