Taking up a renovation loan can be very handy for your finances when you need to turn your newly bought house into a dream home, or giving your current home a refreshed look.
In land scarce Singapore, your house is one of the most prized assets that you can own, and naturally you want it to look and function as close as possible to the ideal state that you envision.
However, realising such a vision doesn’t come cheap and you’ll realise very quickly that the corresponding renovation costs can be quite significant.
If you don’t have an excess sum of money already parked aside for this, the expenditure can cut deep into your savings and put you in a rather uncomfortable financial situation.
This is where a renovation loan can come in handy.
What is a renovation loan?
A renovation loan is an unsecured personal loan that is taken up specifically for the purpose of home improvement, usually when you just bought a new house.
Similarly, you can also apply for this loan if you intend to refurbish your current home, such as fixing up the kitchen, or overhauling the toilets, among other renovation works.
How is a renovation loan useful?
Home renovation is considered a big ticket expense and can amount to a total bill ranging from low thousands to tens of thousands, and can easily put a dent in your savings which should be kept aside for rainy days situations.
In this case, taking up a renovation loan to pay off your renovation bills is a viable option to ensure that your savings or reserves are untouched and intact, while you service out the loaned funds via monthly repayments.
You still maintain liquidity while getting your dream home spruced up. Win-win!
Factors to consider before taking up a renovation loan
Can the renovation wait?
While it is desirable to stay in an ideal space that feels just “you”, it is also desirable not to overcommit financially if there is no absolute need for it.
If your current lodging is perfectly fine in terms of functionality or your reasons for renovating the house are largely aesthetic, then to take up a loan for such a purpose can be less than prudent, and it is best to way till you have excess funds before starting this project.
Can your loan cover the entire expenditure?
The whole intention of taking up a loan is to use it to cover your renovation expenses so that you don’t have to dig into your savings.
It would defeat the purpose of acquiring the loan if at the end of the day, the borrowed amount is not able to pay off the entirety of your renovation bill and you still have to fork out your own money to settle the balance, creating a cash flow challenge that you were trying to avoid in the first place.
As with all personal loans, a monthly instalment repayment is required and will continue till the full borrowed amount has been fully serviced.
Do check that the sum that you need to repay every month is an amount that you can comfortably and fully commit to, otherwise additional interests and even penalties may be incurred, rolling your owed sum upwards into a more severe financial problem later down the road.
Where can you apply for a renovation loan
The usual route for people to apply for such a loan is through banks, but that isn’t the only borrowing option available.
Especially if you’re a freelancer or self-employed with no documented history of fixed or regular income, it can be a challenge trying to get your loan from the bank approved.
A good alternative is to take up the loan from a licensed moneylender.
Money lenders typically are more accommodating to your situation and financial needs, and also likelier to offer you a loan term that takes care of your renovation expenditure while being comfortably serviceable within your means.
Where to find the best renovation loans
You can do a search on Google and go from one moneylender website to another and learn about the types of loans they offer, and the terms that come with those loans. You can also call them up one by one and ask.
A better and easier solution would be to use a quote aggregation platform such as Loanhere.
With a simple enquiry request, Loanhere will generate your customised loan quotes from a curated selection of the best licensed moneylenders in Singapore and email them straight to you almost instantly.
If you’re looking to apply for a renovation loan, get a quote now.