Home Renovation Loans: Here’s What You Need To Know

Home renovation is something everyone wants to get right, whether it is your first home, or a makeover for your long-time home. However, it is no secret that renovations cost quite a bit of money. Especially for projects on the entire house, or projects involving custom-made carpentry, renovations can be quite costly.

That is why it will be useful to know what funding options are available. Some banks and moneylenders in Singapore offer home renovations loans for that purpose. Is it a wise choice?

What are renovation loans?

Renovation loans are loans taken to fund the cost of renovating a home. At banks, the maximum amount you can borrow for renovations is $30,000 or up to 6 times your monthly salary, whichever is lower. Usually, these loans are monthly installment loans, which are paid for monthly.

Home renovations can cost anything between $20,000 to $70,000, depending on factors like the size of the home, extent of work, and materials used. There are several ways to put your renovation loan into good use. For starters, you can get your carpentry done by building and installing wardrobes, cupboards, and cabinets in the relevant rooms. You can also get your electrical and wiring done, or replace your flooring.

However, you should note that items like furniture and fittings are not considered renovations, and are not typically covered under renovation loans.

Should I take a renovation loan?

Most people would say that it is better to fund the renovations yourself, if you have enough savings to do so. After all, it is not wise to spend beyond your means, especially for something as hefty as the cost of renovations.

However, in some circumstances, taking a loan may be unavoidable. For example, you may have to move into your new home at a short notice, or you want to renovate a part of the home to replace old or broken furnishings. Even if you have decided to take a renovation loan, you should consider a loan amount that you can manage to pay back. You may also have to budget your renovations closely, scaling it down to a price that you can manage.

What should I look out for when choosing a renovation loan?

As with any loan, you should take note of numbers like the interest rates, processing fees, additional fees, and whether there is any ongoing promotion you can take advantage of. At most lending institutions, interest rates for renovations loans go from 3% to 7%.

Before you apply for any loans, it is a good idea to set a budget and get a price quote from the contractor. This way, you know how much you can expect to have to fork out, and you won’t borrow beyond what you need.

Conclusion

Home renovations are a significant cost, and knowing the best ways to fund it is important. Here, you can look up a list of moneylenders in Singapore to begin your search for the most suitable renovation loans.

Bookmark the permalink.

Comments are closed