Differentiation between modernization loans and building loans and state subsidies
It is important to understand the principle of the modernization loan. Most are loans up to a volume of 50,000 USD. However, this also depends on the credit institutions. There is a range of 20,000 to 50,000 USD for lending, in some cases even 60,000 USD, depending on the credit rating. The peculiarity: A modernization loan is usually not secured through the land register. Therefore, the entire processing with the provider is much easier than with a classic building loan.
For example, the annuity loan for building finance is always entered in the land register so that the provider has security in the event of default. On the other hand, classic building loans can also be a little cheaper due to the greater security provided by the entry in the land register. However, this usually only applies from loan amounts of around 40,000 USD.
Now one could come up with the idea of using state funding programs from Cream Bank or from state funding institutes that also focus on renovation and modernization. That is true, but it has a crucial catch. State support programs aim to support politically desired investments. It is about energy-related renovations and modernization measures such as insulation, new heating or glazing. Those who want to build a winter garden, make the garden more beautiful or invest in a garage cannot benefit from the programs.
Another focus of government funding is age-appropriate conversion
This means that, for example, the bathroom must be equipped in accordance with statutory regulations and built-in parts in accordance with the DIN standard. If you only want to design the bathroom in a modern way, you cannot use government programs. For this reason, many interested parties do not consider government funding to implement the planned project.
And even if this were the case, it takes a long time before the borrower actually receives the support. It can also happen that no loan is possible, even if all the requirements are met, since the funds for the funding have already been used up in the current year. A modernization loan is therefore the faster and safer alternative. In addition, state conditions do not have to be met when the project is implemented.