Getting A Renovation Loan: The Why And The How
Here's a useful summary of what you need to know about home and renovation loans
WHAT IS A RENOVATION LOAN?
Whether you want to change the interior design of your house, remodel one of the rooms, or make repairs to the whole structure, it can end up costing a whole lot of money. These high costs mean that if you do not have cash available on the spot, you may end up having to maximize your credit cards and ultimately hurting your finances and credit score. In order to avoid that, many people choose to go for renovation loans and mortgages.
When obtaining a renovation loan from a bank, you can get a minimum of $10,000 which can be further extended to up to $30,000 depending on your income as you can obtain a loan six times your monthly salary.
HOW CAN I GET A RENOVATION LOAN?
If you are looking to get a home loan for your house, you need to conform with certain prerequisites. To begin with, you need to either be a Singaporean citizen or a permanent resident of Singapore. To obtain a bank loan or mortgage, you must have a minimum income of $24,000 and should be between 21-55 years of age. Another important consideration to fulfil is having a substantial and fairly good credit score, one that is ideally not bankrupt or maxed out. It will be tougher to get a home loan with a bad credit score but you can certainly try and appeal.
SHOULD I GET AN HDB LOAN OR A BANK LOAN?
While most Singaporeans tend to go for a House Development Board Loan, there are certain situations where it is better or necessary for you to get a bank loan instead. This especially true for if you plan to buy an Executive Condominium as HDB loans are only for HDB property whereas bank loans can be used of any property. Other conditions would include if you want a lower loan to value ratio (down to 80%) or if you have a small budget and want a lower interest rate on your payment (1.8% per annum as opposed to 2.6% of HDB).
WHOM SHOULD I CONTACT FOR HELP REGARDING THE LOAN?
Getting a bank loan or mortgage from a bank may not be as easy as you may think. Taking up a loan or mortgage without putting in the necessary research can put you in a monetary loss as you end up paying more for what you could have gotten done for cheaper on a monthly basis.
There are various services you can find online that work specifically to help Singaporeans to find the best home loan solutions such as Equity Solution.
You can also get help from interior designers regarding the renovation loan, how or where to get it from, and whether it is the best choice for you. However, only designers that have been in the business for a long period of time and have garnered considerable experience in the industry will be able to give you proper advice.