How to get a loan for house repairs
A house renovation loan is a solution for those with limited budgets or small savings who want to renovate, repair, or extend their house. Various banks offer loans for house renovations, but many people may not know what to prepare for, the eligibility requirements, and the terms and conditions of a house renovation loan.
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What is a house renovation loan and how does it differ from a house purchase loan?
Many people are familiar with house purchase loans or construction loans and mistakenly believe that a house renovation loan is also a type of house purchase loan.
In reality, these two types of loans differ slightly in their purpose, resulting in different criteria for appraisal and approval for house renovation loans compared to house purchase loans. Generally, house renovation loans have a maximum loan amount of 70-80% of the appraised value of the house.
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What types of house renovation loans are available?
Popular house renovation loans are those primarily for house extensions, repairs, and renovations. house repair loans are divided into two types: long-term loans and overdraft loans (O/D), depending on the repayment period.
1. Long-Term Loan:
This type offers a long repayment period and lower interest rates than an overdraft loan. It comes with repayment restrictions as specified in the contract. It's suitable for expensive house repairs, renovations, and improvements.
2. Overdraft Loan:
This loan allows you to withdraw funds (by check) even if you don't have enough money in your account. Interest is calculated based on the repayment period, typically 5-15 years.
The advantage of an overdraft loan is its greater convenience and flexibility.
However, overdraft loans are not specifically designed for house repairs, as they have very high interest rates, potentially twice as high as a dedicated house repair loan.
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Conditions for Applying for a house Repair Loan for Houses with and Without Existing Mortgages
1. Houses with Existing Mortgages
Many people may misunderstand that a house with an existing mortgage cannot be used as collateral for a house repair loan. However, a house that is still being paid off can actually be used as collateral.
The bank will consider lending up to the initial appraised value of the house. For example, if the house was initially mortgaged for 1,000,000 baht and the remaining principal is 500,000 baht, you can borrow up to 250,000 baht for house repairs. The interest rate will be similar to a house purchase loan.
2. Houses Free from Mortgages
If your house is free from mortgages, it can be used as collateral for a house repair loan. The bank will appraise the property and determine the loan amount.
For houses free from mortgages, there is also a multipurpose loan type, a house equity loan, which is less complicated than a house repair loan and does not restrict the purpose of the funds. However, the interest rate will be higher than a regular house repair loan.
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Qualifications of Applicants for house Repair Loans The eligibility criteria for house repair loans vary depending on the borrower's ability to repay, with an age range of 20-60 years. The loan term, combined with the borrower's age, must not exceed 65-70 years.
Borrowers must have a stable job with a minimum monthly salary of 15,000 baht for government and state enterprise employees, and a minimum monthly salary of 20,000 baht for private sector employees.
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Low-Interest house Repair Loan 2025
Here are some recommended house repair loan options with low interest rates from various banks in 2025:
1. Government Housing Bank (GHB)
GHB offers several types of house loans for repairs and renovations, including:
– house Repair & Renovation Loan: Maximum loan amount of 100,000 baht for building extensions, repairs (single-family houses, semi-detached houses, townhouses, commercial buildings for residential use, excluding rental houses and flats), and purchasing related equipment or amenities for residential purposes. Interest rate: 1.00% per year for the first 1-3 years.
2. Krung Thai Bank
Krung Thai Bank offers both house equity loans and house repair and renovation loans, including:
– house for Crash Loan: Versatile uses such as installing solar rooftops, EV chargers for electric vehicles, purchasing energy-efficient electrical appliances (Energy Efficiency Rating 5), etc. Fixed interest rate: 1.99% per year for the first year, 6.50% per year for years 2-3, and MRR-0.35% thereafter.
3. Siam Commercial Bank (SCB)
Siam Commercial Bank has announced house loan interest rates as follows: My house My Cash house Equity Loan
– My house My Cash loan offers a maximum loan amount of 20 million baht with a repayment period of up to 30 years. The interest rate for general customers is: Years 1-3 = MRR +1.65% - MRR +3.40%; Average interest rate over 3 years = 8.83% - 10.58%.
Interest rates may vary depending on the bank's financial policies and promotions. However, remember that every time you take out a loan, you assume a debt burden. Therefore, before deciding to borrow money for house renovations, carefully consider how much you are borrowing and how you plan your finances.
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Thank you for the valuable information from DD Property.
