MonthNovember 2019

Credit for bathroom renovation.

Refurbishing a bathroom can cost several thousand USD. Bathtubs, sinks, tiles and fittings made of high quality materials are durable, but can also be very expensive. The savings that are made are often not sufficient for such high investments. A loan for a bathroom renovation can help and is available from many banks. Direct banks on the Internet also grant these loans.

How the loan is available

How the loan is available - offers from artisans

The renovation will not only make the bathroom more beautiful and modern, it will also save energy costs. The property also experiences an increase in value through regular renovations. Since the renovation of the bathroom can be expensive, offers from various craft businesses should be obtained. At the same time, these offers serve to determine the required financial means. If the renovation is not subsidized by the state because the eligibility criteria are not met, it is important that the loan for the bathroom renovation is chosen by the cheap provider.

Top up current loan for bathroom renovation

Top up current loan for bathroom renovation

A loan for a bathroom renovation is also available online. With a good credit rating and positive private credit checker information, direct banks are happy to provide a loan on the Internet. Consultation costs and, in some cases, account management fees do not apply to direct banks. Therefore, online loans are usually a lot cheaper than is the case with a loan from your house bank. If the property is still being paid off, the property owner can top up the ongoing financing with the renovation costs.

However, whether this is worthwhile should be checked carefully, because a separate loan can often be cheaper. In principle, it should be taken into account that barrier-reducing measures, repair measures for renewal, the rectification or repair of structural defects are eligible. This should always be the first attempt before taking out a bathroom renovation loan.

Guarantees or guarantees can be helpful

Guarantees or guarantees can be helpful

If the application for a loan was unsuccessful, another option for granting a guarantee may be. The latter undertakes to pay the installments due if the borrower defaults. This significantly reduces the risk of credit default for the bank. It is therefore necessary that the guarantor has a good credit rating and that the income is high enough for the bank to accept it. In the event that valuables are still available, such as a life insurance or a property, the loan can also be secured.

Personal loans

Personal loans

Another option is a personal loan. This is possible in a private environment, for example through family or friends. The advantage is that this loan is usually granted without interest and without red tape. But even if it stays in the family, a contract should be drawn up in which the amount of the loan, the installments and any interest are recorded so that there are no disputes later.

If you cannot find a financier in your private environment, you should consider that many private individuals are now making their money available on the Internet. It is generally advisable to carefully check the numerous offers and compare them. This is possible on numerous finance portals with a credit comparison. A comparison is extremely simple, non-binding and free of charge. It is indispensable, because this is the only way to choose a cheap loan for bathroom renovation with fair conditions.

Bank opinion on the cost of early repayment of the loan

After some time, the Widecore Bank rebounded the waters of the domestic financial market. Her attention is again directed towards consumer housing loans. Her statement on the cost of early repayment of the loan will not be very pleasing to the banking institution.

 

Unfinished fight

Unfinished fight

On Consumer Credit (hereinafter also referred to as “ LFS ”), codified, inter alia, in its Section 117 also new possibilities and conditions for early repayment of the loan. This has exacerbated the effort to make the whole process cheaper and simpler, which until then was extremely costly, when the fees for early repayment were normally calculated at hundreds of thousands of crowns. At least in addition, situations that could have been difficult for consumers to predict, such as illness or death in the family, were also addressed.

Despite the legislator’s efforts, the interpretation of some provisions of the Act has remained quite unclear. Pursuant to Section 117 (2) of the LAS, the creditor is entitled to reimbursement of the costs reasonably incurred in connection with early repayment. What exactly, however, banks can or can not count on them is not further elaborated. In doing so, banks must, in accordance with Section 95 (2) of the OCTs, state in the pre-contractual information for applicants for a residential consumer credit the amount of the early repayment fee or the method of its calculation. As the market regulator, the Widecore Bank decided to come up with its own interpretative opinion on this matter.

 

No commission and interest expense

money loan

The Widecore Bank took as the main criterion for assessing the effectiveness. Therefore, the costs must be substantively necessary and duly justified in order to be recoverable. In particular, the opinion mentions two cases which, for various reasons, are considered inadmissible.

The first is the commission paid by the provider to the intermediary for the mediation of the consumer housing loan. The Widecore Bank associates this cost with the conclusion of the contract, ie with the establishment of a legal relationship, not with early repayment. The commission as such is perceived by the Widecore Bank as an optional expense of the lender, which itself determines its amount and payment to the intermediary. Thus, the provider has to deal with any commission costs that are budgeted for a period exceeding the early repayment period itself.

The second case where the cost of early repayment of the consumer housing loan may be incurred and explicitly targeted by the Widecore Bank is the reduction of the provider’s interest income after early repayment, or the interest expense of the provider on its debts. According to the Widecore Bank, this lost profit (lower revenues) or futile expense (interest expense on borrowed funds) cannot be classified as purposefully spent, as there is no connection with early repayment.

 

Waiting for justice

loan payment

Banks are still delaying access to the opinion. In itself, this is only one possible interpretation, which is not legally binding. Its impact is still rather marginal, as the early repayment of housing loans is slow. Moreover, instead of clarifying it, it may make the situation more obscure, as the explanatory memorandum to the OCTs mentions both of the above cases as cost-acceptable.

The whole situation will probably have to be resolved only by a court case, or more precisely by the interpretation of the term on the basis of case law. However, this is currently out of sight, so there is some restraint in place.