5 Reasons Why People Choose a Personal Loan for their Home Renovation
Doing up your home renovation can be a huge financial commitment. Rather than dig into your savings, you might want to save some for a rainy day. Or, your funds might be tied to other investments, leaving you with little cash for your home renovation. In these cases, taking up a loan for your home renovation might be a good idea. Home renovations can be an expensive affair.
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You can choose between taking up a renovation loan or a personal loan. While a renovation-specific loan might seem like the obvious choice, taking up a personal loan does have a few advantages. Here are some reasons why people are choosing a personal loan for their home renovation.
1. You may be able to borrow more than $30K
It is not every day you get a new home and the opportunity to do up a space that truly fits in with your lifestyle and needs. So if you are planning to go all out on your home renovation, getting a personal loan might be a good idea.
Doing up your dream home is now made easy.
Unlike renovation loans which usually have a $30K cap on the amount you can borrow, personal loans can allow you to borrow for more than that, depending on your income. Standard Chartered Bank’s CashOne Personal Loan for instance lets you borrow up to 4 times your monthly income. That extravagant design you’ve been eyeing? Entirely possible now.
2. There is greater flexibility in the terms and conditions
Personal loans are less complicated to borrow compared to renovation loans. So if you don’t like going through paperwork or red tape, electronic or otherwise, this should be good news.
Getting a personal loan is fuss- and stress-free.
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They can usually be applied online, with a few clicks of the mouse. Anyone can also apply for a personal loan, so essentially, you don’t need the homeowners themselves to apply for a personal loan for their home renovation.
For renovation loans, you will need to show proof of your renovation contract and proof of your home ownership, in addition to other personal documents, before being eligible for the loan.
3. You can use the extra funds on your furnishings and appliances
When taking up a personal loan with a bank, there isn’t a need to show the bank what you are using the loan for, which means some or all of the borrowed funds can be channelled to your furnishings and appliances.
A personal loan, unlike a renovation loan, can be used to pay for your decor items and furniture.
Design: Sync Interior
These are essential to completing your home and can take up a huge chunk of your home renovation budget. Furnishings and appliances also aren’t covered in a renovation loan, which only covers the costs of renovation works e.g. things like hacking and tiling works or electrical and painting jobs.
4. The money is disbursed to you instead of your interior designer
Unlike in a renovation loan, banks disburse the money of a personal loan directly to you, rather than to a third party like your interior designer or contractor. This is important in a number of instances.
One, in the event that you decide to change your interior designer or contractor halfway because of unfortunate circumstances. Having the money disbursed directly to you means that you are still in possession of the money you borrowed, rather than have it in the hands of your errant designer or contractor.
Personal loans are given directly to you rather than to your interior designer or contractor.
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You also won’t need to incur additional costs because of any changes if you go with a personal loan. With a renovation loan, the money is disbursed via a cashier’s order to the interior designer or contractor initially stated so any changes to that will incur a fee. Most renovation loans also put a cap to the number of cashier’s orders disbursed. So if you are looking to spread out your payment to your interior designer by asking the bank to issue more cashier’s orders, you will also be looking at spending more money.
A personal loan is also a good option in the event that you are using several contractors for your home renovation, as this allows you the flexibility to manage your funds accordingly.
5. You might be able to enjoy great promotions
From time to time, banks offer up really attractive promotions for their personal loans, which make taking up a personal loan more worthwhile. From 6 April to 30 June 2020, SingSaver is currently offering a chance to get your loan fully waived if you are taking up Standard Chartered Bank’s CashOne Personal Loan, which is offered at an interest rate starting from 3.88% p.a. (EIR 7.67% p.a)
For more information and for the full terms and conditions on this promotion, see here.
A word of caution: Most personal loans come with higher interest rates than renovation loans, which is something you should consider if you decide to take up one. Always exercise prudence, do your calculations, and if you can, opt for a shorter loan tenure to reduce interest incurred.
This article was brought to you by SingSaver.
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