The Importance of Home Maintenance and Renovation
Maintaining a home and keeping it in optimal condition can be challenging and costly. Over time, structural issues, paint deterioration, or worn-out finishes and floors may arise. Homeowners must invest significantly to maintain their property, especially if they plan to sell it.
Experts assert that home renovations before selling can increase the property’s value at closing time. One financial option for home improvements is acquiring a renovation loan, offered by banks, government institutions like Infonavit, and some crowdfunding fintech companies.
How Traditional Bank Loans Work
Requirements and conditions for these loans vary depending on the financial institution. Major banks in the country offer such loans for structural improvements, interior renovations like finishes or floors, basic installations, and technological upgrades, repairs, and exterior spaces.
- Common requirements include valid identification, proof of residence (not older than three months), and proof of income.
- BBVA requires a minimum age of 25 and that the loan concludes before the borrower turns 85. They also check employment history depending on the property’s value.
- Scotiabank reviews the home improvement plan and budget to determine approval and conditions.
Traditional bank renovation loans function similarly to mortgages. The loan amount is based on the property’s appraisal, with a maximum percentage (usually up to 80%) advanced. The loan term ranges from five to twenty years, depending on the bank, with a fixed annual interest rate.
- Interest rates start at 9.38% (Banorte), 9.15% (BBVA), 10.49% (HSBC), and 12% (Scotiabank).
Infonavit Home Renovation Loan
If you’re an Infonavit right-holder, you can access loans for home remodeling, repairs, and renovations. These loans range from 10,318 to 163,030 pesos, not exceeding 90% of your Infonavit account balance.
- Infonavit requires a current employment relationship, Afore enrollment, authorization for credit bureau check, and no active Infonavit loans.
- The loan term cannot exceed 70 years for males and 75 years for females.
- The credit is only for projects on the right-holder’s residence, held by the applicant, spouse, children, siblings, parents, or in-laws.
The annual interest rate is 10% for loans up to 41,273 pesos and 11% for amounts above that. Borrowers can choose a repayment term between one and ten years.
Responsible Credit Management
Financial experts agree that credit payments should not exceed 30% of monthly income to prevent financial distress or stress. For home renovation projects, consulting experts is crucial for a solid project, finding quality materials at reasonable prices, and achieving long-lasting results in your home.
Key Questions and Answers
- What are home renovation loans? Home renovation loans are financial instruments offered by banks, government institutions, and fintech companies to fund home improvements.
- How do traditional bank loans work? These loans are based on property appraisal, with fixed terms and annual interest rates. Requirements vary by bank but typically include identification, proof of residence, and income verification.
- What is an Infonavit home renovation loan? This government-backed loan offers funds for home remodeling, repairs, and renovations to Infonavit right-holders. It has specific requirements, interest rates, and term limits.
- How can I manage my home renovation loans responsibly? Keep credit payments below 30% of your monthly income and consult experts for quality, cost-effective renovation projects.
