Renovating a home is a huge task and requires a considerable amount of money. The remodelling plan depends on various factors, like the home size, the contractor and their quotation, the extent of work, and more.
Handling all requirements under a limited budget can be difficult. In Singapore, most homeowners borrow money from banks or licensed money lenders for a reasonable renovation interest rate.
The loan doesn’t entail a lengthy process, and the borrower gets to begin their renovation soon.
Expect a detailed explanation of home renovation loans, their factors, interest rate types, and eligibility aspects explaining how does renovation loan work in Singapore.
Are you planning to repaint your home or remodel the plumbing lines? Apply for home renovation loans from banks or licensed money lenders.
A renovation loan provides financial help to homeowners to repair their homes. This unsecured loan doesn’t demand any collateral. Thus, the borrower is at no risk of losing their properties if failing to repay the loan on time.
Compared to personal loans, home renovation loans in Singapore have lower interest rates. The debtors get one to five years to clear their debt. They can schedule their repayment dates with the lender every month.
Once the bank or money lender approves the loan, the renovating contractor receives the money directly. Later, lenders can go for a site inspection to ensure that the contract has spent the loan amount on fixing the home.
However, home renovation loans differ from home equity and home refinance loans.
Home refinance and home equity loans are more mortgage oriented and have troublesome proceedings. They demand higher interest and longer loan tenure.
To finance your home requirements, take out a renovation loan from banks or the Housing & Development Board (HDB).
Because of their unique purpose, renovation loans have comparatively low-interest rates. They calculated this interest based on the outstanding balance of the loan.
A person can receive a maximum of six times their monthly salary as a renovation loan. The minimum amount the bank can lend is $30,000.
If you’re wondering how does renovation loans work in Singapore, remember that if the debtor needs to require instalments or pay multiple contractors, the bank can charge them extra insurance fees.
It’s essential to be wary of the terms and conditions before you choose a renovation loan. Ensure you know the processing and handling fees banks can levy on debtors.
As in every loan, a borrower must look into the following factors before deciding about renovation loans:
Before you take out a loan, look for a bank that offers a reasonable interest rate. Banks sometimes promote their home renovation loans with lucrative offers like lowered interest rates and discounts on processing fees.
Calculate the monthly debt expenses before resorting to interest rates.
Prepare a rough calculation of the renovation expenditure to determine how much you need to borrow from a bank. Remember, you must earn at least $24,000 in one year to be eligible for the renovation loan.
Besides the interest amount, a borrower has to pay the following additional charges:
When anindividual borrows home renovation money from the same source they borrowed their home loans, they might save a little money. Hence, do your research before opting for a loan offer because banks often promote renovation loan schemes at discounts.
Likewise, check with the money lender if they provide similar loans. That way, you can avail of lower renovation loan interest rates.
Speak to CreditMaster’s financial consultants to understand their offers in more detail.
After you get clarity on the total amount required for the home repair, apply for a renovation loan.
Following are the five essential steps that will help you understand how does renovation loan work in Singapore:
To be eligible for home renovating facilities, check if you fulfil the following factors:
Once borrowers fulfil the eligibility criteria, they can search for contractors or interior designers. Request a quotation from them. That will give you an idea about the exact loan amount to apply for.
Typically, loan providers calculate their interest rates in two ways – flat rates and monthly rest packages. Choose your lender depending on who offers what.
Lenders offering flat rates calculate interest out of the original principal amount. It might seem affordable, but your interest rate will be consistent.
Contrary to that, lenders calculate monthly rest packages out of the outstanding balance at the end of each month. As a result, you pay less interest with consecutive monthly repayment.
Assess your situation and choose which of the options matches your monetary convenience.
After selecting a money lending source, the loanee has to get all the essential documents right. They need:
If you qualify for all the steps, the last step requires you to apply for the loan and submit the documents to the money lender. Either apply physically or through their digital channels.
Once the loan is approved, you’ll receive a notification. Make sure the contractor gets the money rather than you. That’s because the loan policy doesn’t allow you to withdraw the funds and spend them on other uses.
It’s challenging to figure out a standard amount that can fit a person’s home repair project. It depends upon their renovation plans and choice of aesthetics.
Here are two situations when a borrower requests money:
A newly built home requires $41,000 to $60,000 to renovate to your liking. This amount is an approximation and doesn’t include the furnishing costs. Get an estimate from your interior decorator before applying for a loan.
Do you plan to buy a house only to sell it soon? That means you wouldn’t want to spend much revenue on furnishing the home. Most people, in such circumstances, apply for an optional loan from HDB’s Optional Component Scheme (OCS).
From the surface, the offer might sound lucrative, but the OCS offers will differ from one housing project to the other.
Note: OCS begins at $5,000 and above.
When selecting financial bits of help amidst a range of options, remember the best renovation loan provider in Singapore must have the following characteristics:
Provided you possess a decent credit score and have the potential to improve it, seasoned loan providers can give you a chance to refinance the loan.
That means you pay lower interest rates and manage to save money on the loan amount.
Before settling on a money lender, browse their websites for client testimonials. Their reviews can guide you to understand what kind of offers the lenders have and how they treat their customers.
However, be careful of the reviews that try to influence potential borrowers.
An efficient moneylending organisation generally has outstanding loan agents. They help borrowers go through the entire loaning process without much hassle.
An ideal lender should be able to process your loan within 24 hours. If they take longer, we suggest you consider a second option.
If you’re still confused about which money lending organisation can fulfil all the above factors, we recommend visiting CreditMaster.
Whether it’s water leakage or a crack in the flooring, understanding how does renovation loan work can come to your rescue.
Low interests, rapid processing, and easy repayment structures make renovation loans easily approachable.
There are various reasons you can apply for renovation loans. For instance, if an individual wants to expand their house or remodel the interior of their residence, money lenders and bankers will provide financial help.
Above all, home renovation loans are safe. It’s because your property will never be at risk if you miss a repayment.
However, loan experts suggest borrowers should strictly follow the repayment schedule. Else they may get penalty charges which also impact their credit score.