How to best finance the refurbishment for your home?

by Kevin Rossier, www.hypo-advisors.ch

When buying a home, it is common for the buyer to refurbish the new home to his liking.

In principle, financial institutions will only finance two thirds of the cost of refurbishment invoiced by recognized professionals.   This implies that the buyer will have to provide additional equity to purchase the house as the buyer is required to contribute 33% of the cost of refurbishing in addition to 20% of the purchase price.

As an example: a house purchased for CHF 1’000’000 that requires CHF 100’000 in refurbishing expenses.  In this case the lender will consider the value of the property (for lending purposes) to be CHF 1’066’000 and the buyer needs to come up with 20% of the purchase price as equity, and also pay off the balance of the refurbishment.

In this case the buyer is required to put CHF 247’000 of equity into this transaction.