Consider These 5 Points Before You Take A Renovation Loan

Renovation is a part of every household story after a good 5 -7 years spent in the original set up. So, when the time comes to give your home a facelift, you need to make immaculate planning and processing. If it's just about making a few tweaks here and there, cashing it shouldn’t be a big deal. However, major upgrades such as remodeling your kitchen or renovating your interiors will take a toll on your finances which is where you consider taking a renovation loan.

Here are a few points that you should note so that you don’t end up being financially hurt.

Avoid Going For The Maximum Loan

When going for a renovationloan Singapore banks can offer the highest loans on lucrative interest rates. The average amount often quoted by contractors would be somewhere around $30,000 plus. Before agreeing for the same, ask your contractor what can be done in less than that, say around $15,000 to $20,000 and you may be surprised as that could suffice your needs. Also, tighten your budget as much as possible and consider paying it sooner so that it doesn’t affect your existing loans, if any.

Consider Your Purpose

There could be many reasons as to why you are renovating your property: to prolong its livability, upgrade or fix a particular property to sell it out or put up for rent. In case of renting or selling purpose, you will spend logically and not a penny more. However, if you are doing it for personal reasons, chances are most likely that you might end up doing emotional spending which could exceed your original budget. In this case, sticking to your limit should be your top priority by listing out all the pricings beforehand with sufficient cash back up. A mix of both cash and loan should help you carry the load with ease.

Independent Properly Value

Try to know the independent valuation of your property. This will help you get a good idea of the value of other surrounding properties in your neighborhood. This way, you could protect yourself from overcapitalizing your assets and work out on your spending amount accordingly. You need to ensure you are not overdoing it as your unnecessary upgrades could price the house out of its neighborhood.

Make Renovations On Areas With Higher Returns

The statistics may vary from area to area, however, certain sections of the house such as the kitchen and the bathroom will definitely yield higher returns than the rest, almost adding 70 to 80 percent value to the current price. So, consider upgrading them before focusing on other interiors.

Go For Flat Rates

Always go for loans which offer flat tax rates. This would give you a predictable financial status at all times. And if your contractor agrees, split the amount into three cheques so that you can pay him as the work progress and go easy on yourself. Plus, this will protect you from possible scams. For that, an additional $10 on each cheque is worth it.

A wise option would be to go for credit cooperatives like TCC in Singapore. They offer reno loans at competitive rates with flat 4% interest rate. They also offer other services like telephone banking & internet banking and common good funds. You can go through their website for the details.