What’s the Best Way to Finance Your Home Renovation?

Hooray! You finally have your new home — now all you have to do is renovate it. A lot easier said than done, considering you’ve most likely used up a significant chunk of change to (and gone through a lot of paperwork) to even get the keys to the home you now have.

But unless you (and your family) are okay with moving into a space that still has traces of its previous occupants, or worse, without any fixtures or fittings at all, you’re also most likely going to have to renovate. And that’s just as likely to cost you another significant amount.

Fortunately there are lots of options for financing your home renovation that you can choose from to suit your circumstances. See if you can find the right one for you so you can get started on turning your new home into your dream home.

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Put some money away for renovation

If you’ve yet to get started on finding or moving into your new home and are reading this article because you like to think 10 steps ahead, now would be a good time to start saving for renovations.

After all, the reality is that since you’re probably going to have to renovate anyway, you might as well include the cost of renovation in your financing plans for your new home — including that new home’s down payment. Think of it as saving for the whole shebang in one go.

Take out a home renovation loan

There’s a reason loan providers have a loan specifically for renovation, and it’s to make it as easy as possible to afford it. The home renovation loan consumers usually go for covers the cost of things like

Putting in new floor or bathroom tiles
Putting in new taps or toilets in the bathrooms
Putting in new kitchen cabinets
Painting all the walls and ceilings
Fixing the wiring and any other electrical jobs

If you’re missing putting in a new aircon, refrigerator, or sofa, that’s because home renovation loans aren’t meant to cover those or anything else your contractor doesn’t do.

Speaking of contractors, the money you get from a home renovation loan goes straight to them, and how much you get depends on how much they quote. And while the interest rates and fees for renovation loans are relatively lower than other loans, you will have to pay it back a couple of years sooner.

Take out a personal loan

So to pay for things like the aircon, fridge, sofa, blackout curtains, and your home theatre set-up, you could take out a personal loan from https://crawfort.com/sg/ (in addition to, or, instead of a renovation loan).

You won’t have to go to the trouble of finding yourself a contractor or interior designer to get that quote. Depending on how much money you make, the personal loan provider may even give you more money.

You’ll also have a longer time to pay the loan back, the money goes to you, and you can use it for anything you like. (Although, if you want to get a car to go into your new garage, you’re better off getting an auto loan from Capitall.)

Also, you should know that the interest rates for personal loans are higher than those for renovation loans, so think twice before you pick a renovation financing option.

Ask the store for a loan

Another way to pay for things like the sofa, aircon, or refrigerator is to get a loan straight from the stores that sell them. There are a lot of stores in Singapore that offer these kinds of loans which usually take the form of instalment plans that let you pay for, say, your new TV over X number of months.

Obviously, this kind of loan isn’t going to help you much when it comes to paying for painting your walls or installing your circuit breaker, even if it could help you afford everything else.

Use your credit card

Of course you could just charge everything to your credit card(s), and not just things like the window treatments, coffee table, or air fryer, either. There are interior designers and contractors who do take credit cards, although you should know, there will be a 3 or 4% transaction fee (like their fees weren’t big enough, already).

And as if that wouldn’t put a huge dent in your finances, credit cards themselves come with humongous interest rates of as much as 25% per annum. So while this would be a quicker, easier way to get your renovation show on the road, it’s also a quicker, easier way for your debt to snowball.

If you choose a loan to finance your home renovation

You’re going to need a few things to apply and boost your chances of your loan getting approved, whether that’s a home renovation loan or a personal loan (or both).

For a home renovation loan, you’re going to need

To be the homeowner (or one of the homeowners)
To prove you’re the homeowner (with documents)
To be over age 21 but younger than age 55
To be Singaporean or a Permanent Resident

A decent credit score
An income of more than $24,000 a year
Proof that you are making more than $24,000 a year
The quote from your contractor or interior designer

You won’t need as much as all that to get a personal loan, especially if you get it from a licensed moneylender, but generally you are going to need

Your NRIC or your work permit
Proof of how much you’re making (bank statements, pay slips, IRAS Notices)
Proof of where you live (utility bills, titles, documentary proof)

Depending on how much you make, licensed moneylenders may skip your credit score altogether. But if you’re self-employed, you are going to need your Business Registration Certificate and a financial statement showing your profit and loss numbers.

As long as your paperwork’s in order and your numbers are solid, it shouldn’t be too hard for you to get a loan for renovating your home. Just make sure you compare your options and think things through before financing for a smooth-sailing, budget-friendly home renovation experience.