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The works loan: conditions, amounts, duration and rate

As the name suggests, the work loan is a loan offered to carry out work, large or small. Intended for individuals, it is capped at $ 75,000.

What is a work loan?

What is a work loan?

The works loan is part of consumer credits. It is intended for individuals who wish to find financing solutions for their development work.

Sometimes the total cost of works is high, especially in the case of large sites. So, if you lack the necessary funds, you can apply for a work loan.

Generally between 200 and 75,000 $, it finances both small development works (laying new floors, painting) as well as more substantial work (insulation, electricity).

Who can take out a work loan?

Who can take out a work loan?

The works credit is intended for both (co-) owners and tenants.

  • Owners : they can use it for their main and secondary residence or for rental accommodation.
  • Co-owners : they can use it to finance work on their common parts of the property.
  • Tenants : they can apply for the loan themselves. For this, they must obtain the owner’s agreement. This must mention the assumption of responsibility for certain equipment of the habitat (plumbing, electricity).

What types of work are concerned?

What types of work are concerned?

The work loan finances multiple and varied works. It could be:

  • Renovation (ex: facade of a house)
  • Enlargement
  • Improvement (eg isolation of a habitat)
  • Maintenance (ex: painting)
  • Decoration
  • Acquisition of equipment (e.g. dishwasher, washing machine, etc.)

What are the conditions?

What are the conditions?

First, it is imperative that housing was built before 1 st January 1990.

In addition, the applicant must turn to a company with the endorsement “Recognized guarantor of the environment” (RGE), in order to carry out its work. This is a statement awarded by the Grenelle de l’Environnement, under the sign of eco-credit. Non-collective sanitation works are therefore excluded.

What documents are required?

What documents are required?

You must file a loan application file with the bank or financial institution of your choice. The list of documents required obviously depends on the establishment. Several documents must appear there:

  • Identity card or passport
  • Proof of address (recent electricity, water or gas bill)
  • Last imposition opinion
  • Your last three account statements
  • Documents indicating the amount of your income (pay slip, company balance sheet, Urssaf declaration, etc.)
  • Bank details
  • Documents mentioning the work to be carried out (quotes from the companies in charge of the work, purchase orders, invoices for the purchase of equipment)

Please note: if the loan request is made by two people, each of them must have their own supporting documents.

Where to take out this loan?

Where to take out this loan?

You must contact a bank that has signed an agreement with the State (there are about twenty of them).

How to calculate the total cost of the work?

How to calculate the total cost of the work?

Before carrying out work, it is necessary to estimate the cost (material required, potential call to a service company and / or an architect, etc.). Several details must be entered:

  • Size of the area to be renovated
  • Type of work (installation of a new floor in a bathroom for example, or electricity)
  • Access to the site (if you are in town where parking is chargeable, the service company in charge of your work may require an additional cost)

Then comes the estimate stage, preceded by a search for the different prices offered in stores (for the purchase of equipment for example). It is important to make several quotes. This will save you time. For the estimate, it is necessary to consider separately:

  • Cost of labor
  • Cost of equipment (you can buy it yourself, if you delegate the work to a service company or a craftsman)

 

Cost of works according to m²

Type of work Cost per m² for a house Cost per m² for an apartment
Maintenance (ex: replacement of tiling, painting) between 80 and 300 $ between 100 and 300 $
Total renovation of a room (ex: kitchen, bathroom) between 500 and 1.000 $ between 700 and 1.100 $
Important works (ex: plumbing, insulation) between 1.000 and 1.200 $ between 1.100 and 1.500 $

 

Particular case :

If you want to carry out energy renovation work in your home, you can ask a professional to carry out an energy performance diagnosis (DPE). It targets the types of work to be carried out as a priority (as well as their cost) in order to reduce your energy bill.

How to evaluate the various credit offers?

How to evaluate the various credit offers?

After these quotes, you will be able to estimate the total cost of the work in order to subscribe to a loan contract. You will be able to compare the credit offers of various banking establishments. Again, several online sites offer this service. Experts give you an immediate answer in principle (they are often available from Monday to Friday). These comparisons are made according to:

  • Fixed APR (annual effective annual rate)
  • Amount of administration fees
  • Cost of insurance (optional)

The work credit then formulated by the bank of your choice (if your request is accepted) will stipulate the following data:

  • Amount of monthly payments (adapted to your budget)
  • Amount of the works loan
  • Credit term
  • Applicable interest rate
  • Suspensive clauses
  • Early settlement terms

According to the law, the borrower has a withdrawal period of 14 days from the signing of the contract. He can thus resign himself without having to provide an explanation. This does not result in a penalty.

Likewise for the early repayment of the work loan of less than $ 10,000.

What are the types of work loans?

What are the types of work loans?

Among the types of work loans, a distinction must be made between traditional work loans and assisted work loans.

Classic loans

It is possible to take out a conventional loan with multiple credit institutions. Choose them according to the desired loan amount and your needs.

  • Unallocated personal loan

It allows you to have a sum freely granted. It is a loan known for its flexibility.

You do not have to justify expenditure with the establishment to which you borrow. Besides, the latter grants you the necessary funds quite easily. The APR is often also lower.

If you want to do the work yourself, the unrestricted personal loan is perfect.

  • Affected credit

If you wish to finance a specific project, it is better to opt for the assigned credit. Indeed, it should only be used for a specific project, determined beforehand.

Consequently, the lending institution must ensure the proper use of the credit granted. For this, you must provide supporting documents (quotes issued by service providers, equipment invoices).

In addition, the release of funds takes place only once. The rate applied is also often lower than that of the unrestricted loan.

  • Revolving credit

Also called “revolving loan”, it designates a sum of money permanently available after the signing of the loan contract. The borrower can then use this reserve as many times as he wishes.

The revolving credit is regenerated after each reimbursement of the amounts used. Although it is obtained quickly, this credit remains expensive. This is explained by the application of high rates by financial institutions.

In addition, this type of loan does not require proof.

Type of loan according to amount, interest rate and duration

Type of loan Amount borrowed Interest rate Repayment period
Unallocated personal loan > 200 $ to 75,000 $ Between 2.5% and 10% 10 years maximum
Restricted credit > 200 $ to 75,000 $ Between 2.5% and 10% 10 years maximum

 

Note: The interest rate applied depends on the type of loan and the profile of the borrower.

In addition, if you want to borrow more than $ 75,000, you must then take out a mortgage. THE repayment period then extends over 10 to 30 years.

Assisted construction loans

Created by the State, you can only subscribe to it with credit organizations. You can benefit from these credits under certain limits including the capping of resources, the nature or the energy performance of the habitat.

Their rates are usually lower than the rates for traditional work credits.

  • The Zero Rate Loan (PTZ)

The zero-rate loan paves the way for financing, the repayment of which only applies to the capital raised. Therefore, the borrower is not forced to pay his interest.

This loan concerns the financing of works for new housing or existing social housing. It can also apply to the renovation of old real estate.

  • Zero rate eco-loan (eco-PTZ)

Here again, the eco-ptz is a loan granted without interest, to carry out work in dwellings built before 1990. This loan is perfectly suited to energy renovation works.

  • CITE (Tax Credit for the Energy Transition)

This is aid to finance work intended to improve the energy performance of a home.

  • Loan from energy suppliers

They designate ecological loans offered by electricity and gas suppliers to individuals in order to improve the energy performance of housing. The amount fluctuates between $ 10,000 and $ 30,000, for a rate of less than 3%.

  • The loan from the National Housing Agency (ANAH)

An integral part of the “Living Better” program, this loan is intended for work whose aim is to increase the energy gain, the security or the healthiness of a habitat. It is also suitable for individuals wishing to adapt their housing to people with disabilities.

What are the different loan rates?

What are the different loan rates?

The amount of the works loan is capped at $ 75,000. If it exceeds this amount, it then becomes a mortgage.

In addition, after the credit simulations based on the APR, note that this data is only published for information. In order to have a precise idea of ​​the different rates offered, it is necessary to take into account the following elements:

  • Income level
  • professional situation
  • Family situation (married, PACS, single, with or without children…)
  • term of the loan
  • Amount of the loan

Last year, the most advantageous rate for the works loan was less than 3% fixed APR. It applied to any subscription (up to $ 50,000) reimbursed in 60 monthly payments (5 years), or less.

Furthermore, a distinction is made between “minor works”, the amount of which is estimated at $ 10,000 maximum. The institutions granting the credit consider that 3 years (maximum) is the duration which corresponds to a short period.

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