The confinement during the pandemic caused an increase in credit requests to make adjustments and remodeling to the home.
Painting the house, improvising an office, buying computer equipment, were some of the adaptations that were made in some homes.
Lucía occupied a space in her living room to set up a desk where she could work, painted that area, bought a printer and a new laptop. She assumed these expenses from her savings, but hundreds of families resorted to a loan to adjust their house to the new needs during the pandemic.
According to the report “What Mexicans request credit for 2021”, published this February 28 and carried out by Prestadero, a collective funding fintech, personal loans for home renovations are on the increase and last year they occupied the second position as the most requested loans to the platform.
“Due to the pandemic, Mexicans had to confine themselves and began to adapt their spaces, which is why there was a jump in credits for the household item,” reported Prestadero.
For example, from representing 2.06% of the credits granted in 2019, by 2020 it rose to 14.59% and 16.25% by 2021.
On average, financing for home remodeling was 43,300 pesos, with women obtaining the highest amounts for this purpose, according to study data.
“What we saw in the home sector is that many people said: I want to remodel my house, I want to set up an office, I want to build a new living room, a new room, fix the roof, among other things,” said Gerardo Obregón, CEO of Prestadero.
This is why credit applications for home improvements increased considerably, in 2019 loans for this purpose were almost nil and in the last two years they skyrocketed, he pointed out.
While the delivery of financing to give a cat’s hand to households increased, requests for travel and educational issues reported slower growth.
What to consider in these credits?
First check your finances, if you already have debts, think about whether it is necessary to acquire another one to remodel the house and look for cheaper strategies to give your home a different touch; It can be from rearranging furniture, adding some plants and optimizing spaces.
“It is likely that you really want to remodel your home, but if you have debts up to your neck, you have not been able to save, or adjust your budget and you live up to date, it is better to put your finances in order before encouraging yourself for a loan,” he recommended. Borrower.
If after reviewing your finances, you decided that you can take a loan, then determine how much money you require for the changes you need. Although your ability to pay gives you to obtain a significant amount and higher than what you need, do not take everything if you do not require it.
If you have already balanced all this, you know how much you need for the changes you want to make and you will look for a loan, compare what the different financial institutions offer.
Check the interest rate, the Total Annual Cost (CAT), which is the sum of all the costs that make up the financing, and check the terms.
Does a nail drive out another nail?
In addition to applying for home loans, during 2021 Mexicans asked for money to pay off expensive debts, which were already suffocating their finances. For years this action has been led as the main cause of credit requests, according to data from the Prestadero survey.
Gerardo Obregón, representative of this fintech, recommended three things before going into debt to settle other financing.
First, compare the offer of available credits between various institutions and look for the one that best suits the financial moment you are experiencing.
Always check that the CAT is less than that of the debt that you already want to pay or perhaps that it is the same, but that it has a longer term.
Never contract a more expensive debt to pay another, success in this operation is related to the type of credit you acquire. Finally, use the money for the purpose you have already defined.