Taking on a home renovation project may be a thrilling and fulfilling adventure. However, not everyone has the financial resources to afford it. This is where financing alternatives come in. In this article, we’ll take a look at the various financing options for home renovations that every Singaporeans can apply for.
The first step in any renovation is figuring out how you’ll pay for it, and that’s exactly what we’ll do now before we get into the details of each financing option. It’s crucial to plan ahead for an upgrade by making a budget, talking it over with your spouse or other household members, selecting the features that are most important to you, and researching the many financing choices available to you.
Why would you consider taking out a loan?
For various reasons, home renovation loans have become a convenient option for many people. For instance, a newlywed couple may have a number of pending expenses, including those for the wedding, the down payment on a house, and the furnishing of such a home. (Does that ring a bell?) Getting a loan to fund your renovation might reduce stress and make it easier to budget for this undertaking.
1. Renovation Financing
A renovation loan is a common method of paying for house improvements in Singapore. Many banks and credit unions around the country provide this type of financing, which is tailored to home renovations. Remodeling loans can be repaid over a longer period of time (up to five years) and at a cheaper interest rate than other types of personal loans. However, you’ll need to submit specifics about your renovation plans, such as the contractor you intend to use and the total cost of the work. The standard loan limit is S$30,000, which is equivalent to six times your monthly income, and the average interest rate is at 4%. It’s a good idea to shop around and see what kinds of renovation loans different banks are offering right now.
2.Individual Loan
Financing is often an option at stores selling furniture and home furnishings. This has been included among the financial options you can choose from because it’s a practical method to pay for your renovation over time, allowing you to buy the furnishings and accents you need without breaking the bank all at once. When you buy furniture from IKEA, are you ever offered a loan? Many home improvement retailers provide free in-store financing for the duration of a renovation, commonly between six and twenty-four months. The catch is that the interest rates might be quite high if you don’t pay off the loan within the initial time frame.
Let’s imagine you and your spouse are a young Singaporean couple making the average salary, and you’ve decided to upgrade your home. You’ve chosen to take out two loans: one for $20,000 to pay for the store’s new furnishings and decor, and another for $50,000 to fund the remodeling itself. The financing for the renovations will be paid back over the course of five years at a fixed interest rate of 5%. The interest on your remodeling loan will amount to about $2,500 over the duration of the loan, which means your monthly payments will be roughly $875. Your payments on the renovation loan and the store loan combined, with zero percent interest assumed, will be around $2,542 per month.
If you can make the payments, should you still get a loan?
While getting a loan to pay for home improvements may seem like the easiest choice, it’s crucial to weigh all of your financing options before making a final decision. The best way to avoid accruing more debt and incurring higher interest rates in the long run is to pay for the renovations out of pocket, if possible. You should prioritize your renovation costs if you don’t have enough resources to cover them all and only get a loan if you have to.
Conclusion
Although it is recommended that you make a financial plan in advance, you may find yourself in a position where you need to finance your remodeling immediately. To cut down on interest costs, you could get a loan for your renovations with a shorter repayment period. It is also important to do some research, create a budget, and hire a reliable contractor or interior designer to help you through the renovation process.
However, it’s important to shop about and evaluate other lenders’ interest rates, repayment schedules, and other stipulations. If you budget carefully and plan ahead of time, you may make your ideal home remodel a reality without breaking the bank.