After paying a large sum for home down payment, should you take a home renovation loan? Been in this business for more than 9 years, we generally do not see many customer taking up renovation loan. So we explore this trend further.
Then, there is another group of customer whom swear by renovation loan. Personally, I do not like the idea of taking any loans – other than housing loan. Do share with us your thoughts!
We have a regular tie up with Maybank renovation loan officer. She do give us
periodically interest rate promotion, but you never knows until you need it. We only propose when customer ask though. Usually the rate that she provides is around 2.28% interest, minimum amount of $15K, duration of 3-5 years.
Considering the that CPF special account is earning 4% interest, current Saving bond is around 2% interest, taking a renovation loan while putting the cash in CPF or saving bond might be worth it.
Where do I start search for a renovation loan?
- Always try to get a quote from the bank that you are taking the home loan. If its HDB loan, then skip this.
- You can also inquire through with your ID/ contractor firm.
- If you prefer comparison sites, got to Moneysmart or Valuechampion etc.
What happens if I take up a renovation loan?
- Before going for a meeting with a loan officer, you should already decided on the contractor/ ID. Submit a copy of your sign quotation to the bank you wish to take a loan.
- Submit details the bank requires – usually are your income statement, proof of home ownership and credit rating.
- Some bank will arrange an assessor to pay a visit to the unit to be undergoing renovation. You can pass your contractors’ details to bank as you need not to be present.
- After completion , you or your contractor shall contact the bank assessor to visit the completed unit and tally against the quotation that you submitted.
- Once all is good , the bank will disburse the loan amount in lieu of your contractor’s company name. Some banks will deduct whatever admin fee when disbursing cheque. So take note and check the amount.
Finally, whatever the case, never never take a personal loan to do up your renovation. Interest for personal loans are much higher than renovation loans.