Credit work definition
The cost of work on a house has steadily increased over time, like the price of real estate. Today, it represents a fairly heavy expense item for anyone wishing to embark on a renovation, expansion or energy improvement of its premises.
The use of loans has thus emerged as an accessible, simple, fast and flexible response, particularly with the works credit. This credit is provided on demand by banks, financial institutions, brokers or aid structures. You can get up to $ 75,000 from them for a term of more than 10 years. The rate applied to this loan is generally higher than that of other loans. However, this loan has many other advantages that result from its characteristics, these conditions of granting, the tax credits they provide as well as its terms.
What is work credit?
The works credit is allocated to the financing of expansion, renovation, thermal insulation of a house or the adaptation of housing to the disabled. It affects all types of construction or work dependent on an existing property. If you are looking for a loan to build a veranda, a kitchen, a bathroom or make some embellishments or decorations, you can validly apply for a work credit. However, it is advisable to be well informed, because some loans exclude the so-called exterior work such as the fence, the terrace and everything that is not directly associated with housing.
The works credit can be a credit allocated to actions agreed in advance with your creditor. You must produce supporting documents detailing the project to be carried out and the loan released will be used to pay the cost of the work.
The work loan can be a personal loan and in this case, you only have to meet the conditions of resources, files and solvency to quickly benefit from it.
Regarding unallocated credits, the amounts allocated range from $ 1,000 to $ 75,000 with a repayment period ranging from 12 to 180 months. It should be noted that the characteristics may change depending on the lender.
What are the types of work loans and works financed?
We can distinguish work loans according to the lender. So we have:
- bank loans which include the housing savings loan associated with savings, the personal loan for work without justification for use, the zero-interest loan (PTZ) linked to energy-saving interventions in the building.
- loans provided by aid structures such as the eco-work loan (intended for the ecological renovation of buildings), the home renovation loan, the social home loan for first-time buyers and the agency loan national housing (Anah).
The expenses that can be financed by these credits can be classified into 3 categories. Expenses related to adaptations which aim to improve access to premises described in appendices 1, 2 and 3 of the decree of September 30, 1987, maintenance expenses and those allocated to the improvement of housing. Among the accessibility and adaptation work, we have:
- priority work on the building motivated by considerations of sanitation, safety, etc.
- work relating to minimum living standards, decorative work and work aimed at improving daily life in the building
- work to allow livability and access for people with reduced mobility. They give the right to an exemption on intermediate rental ceilings (PLI).
- housing energy efficiency work (improvement of heating, thermal insulation, installation of solar panels, etc.).
Maintenance expenses are used to maintain the facilities (electrical, sanitary, gas, etc.) and the accommodation (ceiling, floor, etc.) in good condition so as to keep their consistency and original equipment in good condition.
In addition, some minor home improvement works may benefit from Anah grants. They are in the field of security, sanitation, energy performance and personal autonomy.
The works credit is issued to natural persons owners and occupants, owner lessor or tenant of a dwelling. These people should not have at the time of the request a file with the commission of overindebtedness of the Bank of United States. A request can be made in two between with a borrower and his co-borrower.
Most loans are intended for primary residences, often with the obligation for beneficiaries to occupy the premises for a minimum number of months per year from the end of the work. But there are credits for second homes under certain conditions. In all cases, the accommodation must be located on French territory (metropolitan area or overseas areas).
To obtain a work credit, you must demonstrate your ability to repay it in the terms of your commitments. A borrower with a CDI or with rental income and any other regular income will a priori have more credibility with a bank. A borrower up to date with his commitments can combine a work loan with other credits and aid such as the 0-rate eco-loan, the development loan; only, his maximum borrowing will be reduced by the capital owed remaining from his first loan.
How to subscribe to the work loan?
After choosing a works credit, you must complete a credit application and send it to the financial institution. It can be done by mail, online or over the phone. In the form to be completed, you must fill in:
- your identity, family and professional situation as well as your monthly income. The same information is requested for a potential co-borrower.
- whether you are an owner-occupier, lessor or a tenant.
- your benchmark tax income from the previous year
- your current expenses (mortgage, consumption, car, alimony, etc.)
- the address of the accommodation where the work will take place
- A financing plan for the work to be done and details of the type of work (transformation of a room into housing, energy performance, etc.)
- If you wish to take out insurance or not, specifying the nature of the insurance if your answer is yes
- A sworn statement to be signed
This completed form must be accompanied by some supporting documents to provide such as:
- a photocopy of the identity card, passport. For households, a family record book, a PACS certificate etc.
- A copy of the tax notice for the previous year (attach the other notices in the event of a tax household with several members)
- The last three payslips as well as proof of other income. For fixed-term contracts or temporary workers, you must provide a work contract or bordeaux mission which proves continuous activity over the past 2 years
- Bank coins
- Proof of ownership for the owners, a copy of the lease and the last rent receipt for the tenants, the pay slip and a retirement notice for retirees
- Quotation of invoices for work less than three months old, pro forma invoices for materials, building permits, etc.
- Insurance not compulsory but in the absence it is requested to complete a health questionnaire.
Depending on the type of work, there are additional documents to file the work estimates (energy efficiency, etc.), a copy of the disaster order for repairs after bad weather, the agreement of the Anah in case of subsidy etc.
The rate, cost and repayment of a work loan
You can estimate beforehand the cost of a desired work credit. The real cost of the loan to be repaid is the difference between the required capital and the additional costs which include the nominal rate of the loan, the costs of the loan files and the insurance taken out. On these elements, depends the level of the annual percentage rate (APR) given by each lender.
Repayments are made by monthly installments made up of capital on the one hand and the cost of credit on the other. In some cases, we can commit to paying the capital amount at the end of the loan maturities while continuing to reimburse the charges related to the APR every month. It is also possible to adjust its payments according to the evolution of your financial health. But in the event of termination of the occupation of the premises as a main residence as agreed in advance, the creditor may demand the remaining capital due with or without a penalty.
What are the advantages of work credit
The works credit is:
- suitable for renovation and insulation of buildings and accessible
- flexible, easy and multi formulas
- can be combined with a PTZ, other work credits
- tax deductible depending on the work carried out and the type of loan
- reversible, you can revoke your agreement free of charge within 14 days
- safe with the insurance coverage offered to you.
Funds are released within 3 months of the end of the work after presentation of invoices from the service providers or the company that carried out the work. Invoices must be in the name of the beneficiary for less than 3 months. The co-owner can produce the union document attesting to his participation as well as the communication of the minutes of the GA which voted for the work.
Many works credits are eligible for aid for energy transition and green growth. The installation of mixed solar equipment, for example, may give entitlement to the tax credit for the energy transition (CITE). Likewise, owner-occupants are entitled, in the event of works, to ecological solidarity aid (ASE) within the framework of the Anah “better living” program.
The sums allocated represent 10% of the cost of the work. Households benefiting from this bonus are also eligible for the eco-PTZ “live better”. This tax assistance is valid until December 31, 2016.
The work credit is a loan adapted to all interventions of renovations, arrangements, extensions or decorations, internal to your home. If necessary, consider evaluating the market's offers with a comparator to decide which choice is best for you.