Home is where the heart is. We all want our dream homes, a place where we can relax after a long day of work. In recent years, more and more Singaporeans are renovating their homes to make it more comfortable, or simply to increase the resale value of the house. There are so many things one can do in the renovation to personalize their homes, such as repainting the walls, refurnishing the bathrooms, carpentry work or replacing the flooring. In truth, we all want a comfortable home that we are proud to call our own.
Renovations, however, aren’t cheap. The typical renovation in Singapore cost at least $30,000. Some projects even exceed $100,000. Unless you have been consciously saving for the renovation project, this isn’t money that many people have lying around. You will most likely have to seek some form of financing for your renovation.
Here’s How a Renovation Loan can Help You Get Your Dream Home
There are many renovation loan options in Singapore and they are similar to personal loans. They are, however, given specifically for renovations or improvements of existing homes. You can use the money for any decoration in the house. It could be a new wall colour, that window grills you’ve always wanted to change or the latest bathroom design. Over the past few years in Singapore, renovation loans have been gaining popularity as more couples beautify their homes. You can use a renovation loan to pay for:
- Painting your walls
- Electrical wiring and other electrical works
- Purchasing and installing built-in cabinets
- Flooring and tiling
- Bathroom fittings
- External work on your compound
Home renovation loans cannot be used for purchasing furnishings unless otherwise stated in the package.
What are the Benefits of Taking a Home Renovation Loan? Why Should I Take One?
Many Singaporeans are torn between taking a home renovation loan and a personal loan to pay for their renovations and it can get pretty confusing. Some prefer to take personal loans because it is more flexible and is unsecured. Unsecured loans mean that you do not need to give collateral such as a car or a house to get the money. Others prefer to use their savings and limit their renovating budget.
So, before you frown and click away from this page, here are a few benefits of getting a home renovation loan.
1. Home renovation loans are cost-effective
Personal loans are more flexible than home renovation loans and are unsecured. However, these benefits come at a high price; a higher interest rate. You will be paying back much more on a personal loan than you will on a home renovation loan.
CreditMaster provides renovation loans at lower rates. We understand how important a home is to you and we want our clients to live in the best and most comfortable area. If you have decided to renovate your home, make the best out of it. Don’t limit your budget and give up on the designs you like.
2. They have longer tenures and repayment plans
Unlike personal loans, home renovation loans have a longer loan tenure. Most renovation loans have a tenure that starts from 1 year and goes up to 5 years. Therefore, your payments can spread out over the years to allow you to repay the loan comfortably.
3. They can help boost your ROI (Return On Investment)
Taking a renovation loan will give you access to the funds that you need to make your renovation possible. You can invest enough cash to ensure that the renovation is done well. This will boost the value of your home as well as the ROI in the long-term if you ever decide to sell your home.
4. Finally getting your dream home
The reason why many people choose to renovate their house is to get their dream homes. Sometimes, one sees beautiful home designs on magazines, social media or at their friend’s place. It’s a place that you’ve always dreamed of living in and renovation loans are here to help with just that!
If you want to purchase furniture as well, you can always apply for a furniture loan in addition to your renovation loan. This will give you the extra money you need to furnish your home.
How Do I Know if I Qualify for a Home Renovation Loan?
Taking a loan is a serious commitment. It will be wise to find out all the terms and conditions before taking the loan. Make sure that you are comfortable with the repayment plans before taking one. The loans will require the applicants to be either Singaporeans or PRs. They have to be at least 21 years old and have a stable income. Borrowers can loan up to 10 times their income, though this varies with each individual.
How Much will I Need for my Home Renovation?
If you’re planning to take out a home renovation loan, it’s important to know exactly how much you’ll need for the renovation. You’ll therefore have to begin by budgeting for your renovation.
The type of housing and the level of renovation you’re planning will determine how much you need. The average cost of renovating a HDB in Singapore is about $53,000. Your renovation may cost much less or far more than this. The following factors will determine your budget:
1. Your contractor you choose to work with
If you don’t want to do all the heavy lifting for the renovation, you should opt for a professional contractor. They will assist you with every step of the project; from designing and conceptualizing, to managing the project.
It’s a good idea to hire a contractor that is experienced and has a good reputation, especially if it will be a time consuming and expensive project. They are going to be building your new home for a few weeks. Shop around for different designs and prices before deciding on one. If possible, ask your friends or family who have had their homes renovated before for tips. You will have to include the contractor’s fee in the budget. Many contractors charge based on the cost of the materials that they will use. Naturally, better quality materials will command a higher price.
2. The interior designer
Many contractors are able to help with the design phase. However, if your project is large, you may choose to engage a professional designer. A designer will help to conceptualize and design the project. They will help to bring your dream to life.
The designer will create a 3D design that will help you get a better idea of what the finished product will look like. You can therefore make important decisions before the actual renovation begins, and save time as well as money.
An interior designer will also do the legwork. They will source for furnishings, fittings and furniture to achieve the look that you want.
If you’re planning to hire an interior designer, you should include their fee in your budget. These professionals typically charge a consultancy fee in addition to the cost of the materials.
3. The design and build contractor
This is a contractor that will see you through every step of the renovation. They will not only design the renovation, but also manage it. If you don’t want to spend the extra money hiring an interior design team, then this would be a great option for you.
These contractors charge a consultancy fee for the design. Their build fee will be based on the cost of the materials.
Must-know Tips when Getting a Home Renovation Loan
1. Use your current lender
Are you currently on a home loan or any other loans? If you choose to work with the same moneylender, you will get a better interest rate on your renovation loan. Banks and financial institutions are more likely to give a favorable interest rate to their existing customers.
2. Compare home renovation loan rates between different loan providers
Different lenders provide loans at different interest rates. Take your time and shop around the different moneylenders to get the best interest rate. It’s a good idea to compare different lenders and what they have to offer.
3. Understand the fees and charges on the loan
This is the important part of taking a loan but many people tend to brush through it. The terms and conditions and the fine print on the contract. There are various other charges and fees that are payable on a loan. It is important to understand these before agreeing to the terms of the loan. These include processing fees, disbursement fees, fees for late payments and cancellation fees.
From October 2015, licensed moneylenders in Singapore are not allowed to charge an interest rate above 4%, regardless of secured or unsecured loans. If there are late repayments, the maximum late interest rate moneylenders can charge is also 4% per month. Licensed moneylenders are also not allowed to charge a processing fee of more than 10% of the principal loan amount. Click here for more information on licensed moneylenders in Singapore.
4. Don’t go for the maximum loan amount
There may be so many things you want to do in your renovation that it is tempting to go for the maximum loan amount. However, this isn’t advisable. It is important to remember that you will have to repay the loan. Calculate your budget and settle on a repayment amount that you can afford. You don’t want to strain your finances too heavily because of the loan.
Whether you need a HDB home renovation loan or a jumbo renovation loan, we have a solution for you! CreditMaster is a reliable and experienced loan provider in Singapore and we have always customized our loan packages for our clients. We truly understand the importance of having a good home and hence, we offer home renovation loans at low interest rates. Our application process is fast and the cash can be disbursed within 24 hours should all the necessary documents be submitted. Speak to our friendly financial consultants today!