Can we include a work envelope in a mortgage?


Whether you are investing in new or old real estate, you will need to use a mortgage to acquire it. In the majority of cases, you will also have to carry out work in the house, whether it is the finishing touches or a complete renovation. Can you integrate the price of the work into your mortgage and is this the best solution for your project? Zoom on the issue in this article!

How to include the price of the work in your mortgage?

Whether you need to insulate your future home, decorate it to your liking by doing the floor coverings or painting, renovating the old one or even expanding to accommodate your family, the estimated cost of the work is integrate into your total acquisition budget.

You must therefore respect the usual conditions to take out a primary or secondary residence loan and be vigilant about your debt ratio. In practice, this should not exceed 33% for your remaining living to be sufficient and for your banking establishment to grant you the loan.

It is of course possible to integrate a work envelope in your main mortgage. Indeed, it is the arrangements that you are going to make that will make your property conform to its use. We do not live decently in a house without a roof or rough concrete!

What are the advantages ?

The major advantage of directly integrating work into your main loan is that you benefit from a single rate, generally much more attractive than that of a work loan, which is similar to a consumer loan.

You therefore have a single borrower insurance, a single guarantee, a single commission to pay to intermediaries if they exist, and also one-off administrative fees.

To include the amount of the work in your loan, it is necessary to quantify them precisely. For this, you will need to make upstream quotes in order to present them to your bank and accurately assess the total amount you need.

Please note that financial organizations define work as any element relating to immovable property (integrated) and not movable property (movable). So you can finance the floors, walls, a staircase, a walk-in shower or a fitted kitchen, but you cannot use the amount granted to buy yourself a sofa or a washing machine.

What are the disadvantages ?

If financing the work through your mortgage is the most financially interesting option, it remains more restrictive in terms of formalism. Because the work is financed on an estimate, you must submit invoices to release the funds as you complete the work.

Be attentive to the requests of banking establishments, some require the intervention of professionals to finance your project, others accept that you take care of the work yourself, still others give you a mix of the two solutions depending on the nature of the work .

This variable can therefore limit the choice of your banking partner, especially if you plan to carry out the majority of the work. It is therefore advisable to find out about this particular point and to negotiate it if necessary with the financial institution that you have chosen.

Finally, if you want to finance work after signing your main mortgage, know that the process requires you to resort to a loan buyback, which is not always to your advantage …

What other solutions to finance the work?

You will no doubt have understood it, you can buy back your mortgage to integrate a work envelope into the new loan thus carried out. This alternative can be interesting if you have a lot of loans left and current borrowing rates are going down.

In all other cases, it is preferable to take out a “work loan”. This is then a so-called “affected” personal loan, a form of consumer loan that is more attractive than an unallocated loan since the object of the financing is defined in advance and considered “useful” by your bank.

If you do not wish to justify the purpose of the loan and be exempt from the transmission of quotes or invoices, you will have no other choice but to contract a consumer loan for personal convenience, the duration of which is often shorter and the higher cost.

How to get the best offer including mortgage and work envelope?

Whether you are considering a new acquisition in which work is required or you want to make a loan buyback to encompass the amount of the work, finding the best loan deal can save you several thousand dollars.

If it is possible to use a broker, it is recommended that you do an online eligibility simulation which will prevent you from incurring additional costs. By providing the requested data with reliability, you obtain precise simulations at the best rates from various banking players.

It’s simple, free, fast and without obligation: you are free to follow up or not to the proposals made to you. Finally, comparing mortgage offers with works available on the market gives you bargaining power with your banker, think about it!

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