Need to improve your home? Are you planning to renovate or expand, redo your bathroom, your kitchens or even offer yourself a veranda or a swimming pool?
All these arrangements can be financed through a works loan! But, what exactly is it and at what rate to buy it? We take stock in this article.
Reminder: what is a work loan?
We commonly speak of a “work loan” to finance home renovation or extension projects, but this term actually hides a consumer credit.
This credit is said to be “affected” because the lending institution knows exactly what it is financing. There is no question here of benefiting from cash to settle debts or go on vacation, but to carry out work according to a defined project.
In addition, the work loan offers more protection than the unaffected consumer credit. It is generally granted on estimate and released as and when invoices arrive. If the craftsman, for example, does not respect his commitments, it is therefore possible to terminate the loan offer.
The works credit is the option chosen for loans with an amount less than 75,000 euros. Beyond that, it is a mortgage that must be taken out. The duration of a classic work loan is on average 10 years, and this is the duration that we use to illustrate this article.
Focus on a specific work loan: eco-PTZ
For the moment, the eco-PTZ, that is to say a zero rate loan and therefore without bank interest to repay, is maintained until December 31, 2021. It is therefore undoubtedly very attractive, but not not for all projects, explanations …
The eco-PTZ is granted to owners who have owned a home as their primary residence completed for at least two years. The work must have an energy saving aim and only cover the insulation, the replacement of windows and doors, the heating system and the hot water production system.
The maximum amount of credit granted under the eco-PTZ is 30,000 euros, but it does not suit either the desire for expansion, or the desire to create a new living space …
The 10-year work credit: for all your projects under 75,000 euros
Most owners will opt for the classic works credit, either as an extension of an eco-PTZ for energy renovation work, or mainly for all other renovation and expansion projects inside and out. .
But the rate of a work loan can vary greatly from one bank to another. Moreover, the competition is fierce, because all the credit organizations distribute it. It is therefore possible to take out a work loan from your usual bank, but also from an external organization specializing in consumer credit.
For a work loan over a period of 10 years, the rates observed range from 3% to almost 8%. A huge gap that has enough to lose more than one borrower. In question ? Multiple promotional offers or punch and rates varying according to the profile of the borrower (s).
Get a work loan at the best rate
To obtain a works loan under the best possible conditions, it is possible to use the services of a broker, who will generally invoice his service, either directly to his client, or via a commission received by the bank.
Another solution, more profitable this time, is to use the free and non-binding services offered by online simulators. In all cases, a single watchword: do not take out work loans without having compared the offers with each other.
In order to build a good record and to claim the lowest rates, it is necessary not to exceed the debt ratio of 33%. The current amount of household loans (real estate and consumption) will therefore be taken into account.
Finally, a stable financial situation and above all regular income is essential. Civil servants, permanent contract holders or business leaders with a stable or increasing balance sheet will therefore have a clear advantage.
Your last bank account statements will also be requested by the credit organization, even if this is not systematic, to ensure that you are managing your income soundly. In all cases, the credit professional will check that you are not the subject of a file in the FICP (File of Personal Credit Repayment Incidents).
Knowing how to compare works credit offers
To compare the offers of work loans without making a mistake, it is absolutely necessary to refer to the APR (Annualized Global Effective Rate) offered by the various establishments.
This rate includes not only the bank interest rate, but also ancillary costs such as administrative costs and any guarantee costs. For a work credit over 10 years, the amounts can be high and the APR will be expressed including death and disability insurance.
Be aware, however, that borrower insurance, if recommended, is not mandatory. If you need to take out one, consider delegation of insurance, which allows you to choose the loan insurance of your choice in order to benefit from an even lower APR.