Lots of the costs you have to take care of when you decide to build a new home or when you are getting a real estate property. In these cases, the costs to be spent to complete the completion of the property may be quite high and it often happens that the owner has insufficient liquidity to complete the work.
In this regard, a good solution might be to apply for a mortgage to address this type of problem. There are many such funding available from most bank banking institutions. For example, we consider home renovation loans to provide the liquidity needed to carry out all those jobs aimed at improving the internal and external environments of the property.
Among the large loan offer is also the so-called construction loan, that is, the financial product that guarantees coverage of the completion of a property.
How do construction loans work?
As we said, the mortgage for building completion can be a good solution for anyone who needs to cover the cost of work related to the completion of a property. This is a financing that allows to get up to 80% of the value of the property itself and where, in this case, for the value of the property we mean the value that the house will acquire once the works have been completed.
It is possible to apply for this form of mortgage both for the purchase of a home and a second home and the capital is paid in reference to the estimates of the manufacturer and paid progressively on the basis of the progress of construction work.
With regard to the requirements for access to the mortgage for completion of construction, to obtain this type of financing will need to demonstrate the ownership and possession of a property still under construction. In addition, in order for the claim to be successful, the mortgage lender must have a good credit profile and demonstrate to the bank that he will be able to pay the installments.
What benefits do construction mortgages offer?
The first advantage is to have a reduced VAT rate at 4%. This allows you to obtain considerable economic savings on the calculation of the mortgage installment, especially when the home in question will be used as a home. If it is a second home, the rate is 10% instead.
In addition, because often manufacturers come up as co-operatives, buyers are offered the opportunity to buy a new home at particularly competitive prices since co-operatives cannot force a ceiling set by law by the Building Committee Residential.
Buying a home with a mortgage for building completion has therefore its advantages but also some disadvantage. If you are planning to apply for this funding, it is important to keep in mind the failure of the manufacturer.
Secondly, it is important to carefully evaluate the work that is still to be done on the property so that you can know in advance the most appropriate amount to apply to the bank.
Finally, if you decide to opt for this kind of financing and the home in question is used as a home, it is important to keep in mind that work must be completed within the deadlines set for the mortgage contract. It is worth the loss of the benefits associated with tax deductions.