Today, buying a new apartment, Ukrainian people most often get only a box without any decoration. In order to renovate even a one-room flat you will most probably have to spend $5-10 thousand.
Quick but expensive
Having come upon a sign ‘on installment’ in the construction supermarket, don’t rush to the credit inspectors with a roll of wallpaper. Most often in such way the banks offer no-pledge consumer credits, or arranging credit cards. Of course, in order to get such a loan you need minimal set of documents: passport, identification code and income record.
But you should take into account that the credit terms here are a lot worse than in case of pledge credits. Firstly, the term here often doesn’t exceed 2 years, and the amount – 20 thousand hryvnyas. Secondly, such a credit is given only in hryvnyas, and only to the people who have high official income. You can also be stopped by the high interest. Overpayment for a card loan will make 25-40%, and for consumer loans it is even higher – 60-80%.
‘The best way out is to take the receipts for consumer equipment and furniture that you are planning to purchase, and to get a purpose loan in a bank,’ – recommends Maryna Chuyko, the chief manager of Home Credit Bank company.
Pledge will save you from overpaying
‘But the most profitable will be getting a renovation loan against a pledge,’ – assures Rostislav Maykovich, the financial analyst of Prostobank Consulting company. ‘The terms for such programs are not very different from purchasing the estate on credit. The average interest rate is 16-17% in hryvnyas and 12-14% in foreign currency, and you will be given a loan for the term of 10-15 years.’
In this case a borrower can count on the amount of 70-80% of market cost of a pledge. The bankers will not demand the renovation budget, so you can spend the money for construction materials and for furniture as well. As a pledge you can use not only an apartment where you are planning to make a renovation in. You can also use a lot, a cottage, some other real estate, and even a car.
This variant obliges to estimate and insure a pledge. You will also have to pay for life insurance, one-time commission for giving a loan – 1-2% of the amount – and notarial arrangement. But despite all above, in the end, all your efforts and additional expenses will prove their value – you will not overpay for the renovation two or more times.
Credit for new settlers
It is the easiest to make a renovation on trust for new settlers who are getting an apartment on credit. ‘Nowadays the banks are offering separate programs where a renovation credit goes together with mortgage,’ – told Anastasiya Semenets, the director of Fabrika Finansov company.
In such way you can significantly save. Firstly, a bank will give the money at comparatively low interest set for the mortgage. Besides that, a borrower will manage to benefit from commission additionally. Arranging one credit instead of two you don’t have to pay twice for bank service, insurance and property estimate.
Hitting the mark
Almost all large banks in Ukraine have already had special programs providing renovation credits. And if before you could only renovate an apartment, now you can get a loan for a country house, too. Today such credits are given for the period of 1-7 years.
‘The amount of no-pledge purpose renovation credit is limited and makes, as a rule, 100 thousand hryvnyas maximally,’ – notes Sergey Maksimenko, partner work manager of Favorite company. ‘But this variant is less preferable than credit against a pledge as the interest rate in such programs is often more than 40% annually.’
Besides that, remember that a bank can demand finishing the renovation within a year, and will be controlling the money usage. That’s why when arranging a credit be ready to show the preliminary renovation budget, and at the end of it you will have to reveal the receipts and accomplished works report to the bank.
