One way to own your own home at a much cheaper cost than building it is to buy real estate for renovation. There are really a lot of ads for selling such houses in the secondary market. Devoting a little bit of time for their review, you can find the building in good condition, at an occasional price, in an attractive area.
Building a house from scratch requires, apart from large financial resources, an appropriate plot, necessary permits, as well as water, electricity and sewage connections.
When buying a house to renovate
Most of these problems are basically out of our minds. Finding real estate in fairly good condition and buying it at a bargain price, we are able to become owners of our own home for reasonable money.
To buy a property for renovation, you can use a mortgage to buy and renovate a building, or buy a house with your own money, and then apply for a bank loan to renovate it.
In the latter case, we can opt for a mortgage (housing) or mortgage loan, which can be used for any – in both cases the collateral is a mortgage on the property.
In Poland, banks that grant mortgages for a house to renovate, however, set certain conditions. Each of them they have a slightly different approach to the possibility of financing such an investment, but you must be prepared for assessment of the technical condition and wear of the property, assessment of security by the analyst and assessment of the marketability of the premises.
If the property is uninhabitable
Some institutions will grant a mortgage, but only for a combined purpose, i.e. purchase and renovation. Let us also remember that today no bank will grant us a mortgage for 100% of the property value, so you must have a minimum own contribution of 10%.
At the outset, the bank will not refuse us to grant a loan for a house to be renovated. However, it must issue an assessment of the state of the property and thus assess the risk of financing such an investment. The value of the entire property after renovation will also be assessed.
Real estate buyers who are able to do most of the work themselves may be in a good position. They have the opportunity to carry out renovations reliably and cheaply, so it can be a great investment opportunity for them. Depending on the needs, such a house can also finish in a different standard, and to start with only the most urgent work to spread the costs in the long run.