Reno101: How to better finance your renovation

Oftentimes, renovation comes to be one of the bigger financial investments you have to make in your life. No one is denying that it is costly — an average homeowner in Singapore aims for a renovation that looks to be a whopping SGD$60,000! But fret not! Here are 3 ways you can better finance your renovation!

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Step 1: Set a Budget Plan

Before you begin the renovation, it is important to set out a concrete budget plan for all aspects of your renovation. It can be divided according to the rooms involved in the makeover, and different components needed for the rooms involved. Therefore, it would be helpful to be familiar with the materials involved, and their respective costs. Here are some of the major components to take note of!

FLOORING

Not all floors are created equal! Some flooring materials cost more than others. For example, some flooring like granite and marble would cost more per square feet than others like laminate and vinyl. 

Additionally, different flooring types are optimal for different functions. Overall, the collective flooring cost for a typical HDB apartment can come up to between $6000 and $9000, depending on the size of your apartment (3 room, 4 room, or 5 room!). Here’s a handy guide to give you a rough gauge on how much your flooring can cost!

FIXTURES

Other than flooring, another important component would be your home’s fixtures! The right lighting and plumbing fixtures can make a world of difference in terms of the feel and functionality of your apartment! Some of the more common types of fixtures include lights, ceiling fans, water heater, toilet bowl, and wash basin and corresponding tap.

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In these cases, the main costs involved are from the installations of the fixtures – the number of cable, lighting, and power points, for example. However, it must be noted that there are separate costs for additional installation work, such as wire concealment and plastering. And of course, the individual prices of these fixtures vary accordingly depending on your contractor, type, and brand of the fixtures.

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FURNISHING

A must-have for any home makeover, but sadly also one of the most miscalculated parts of anyone’s reno financing. Yes, we are talking about the home furnishing products that every home needs! When it comes to financing renovation, many homeowners tend to set a budget that only caters for renovation, often thinking that it should, or that it will miraculously, cover the furnishing part of the makeover as well. And that’s one of the most major budgeting mistakes homeowners make! So, avoid making this blunder by setting aside a budget for your furnishing products. You can start on this by listing the prices of the major die-die-must-have furniture and home appliances you need for each of the rooms you are making over. This should give you the bare minimum you need to set aside!

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STORAGE OPTIONS

Of course, don’t forget to install ample storage spaces for all of your knicks and knacks! These storage options can come in the form of your shoe cabinets, display cabinets, kitchen cabinets, and book cabinets for your study! If you’re tight on a budget, the best advice we can give you is to go for off-the-shelf products, instead of carpentry, for your storage solutions. This will heavily reduce your costs!

Interior Designer: DB Studio

Step 2: Consider if you need a reno loan

Another important note is that savings alone may not be enough to finance the entirety of your renovation. The best alternative would be to obtain this amount via a renovation loan. In fact, there are a few reasons why a renovation loan may be a better option than other types of loans. For one, they have a lower interest rate as compared to personal loans, and with more lenient income requirements. Most banks, financial institutions and insurance companies in Singapore offer renovation loans which allow you to pay by tier, with interest rates varying between 4.38% to 5.38% per annum for a five-year loan tenure.

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Here are some renovation loans offered by various banks in Singapore:

  • OCBC Renovation Loan Monthly Rest: 5.37% monthly rest, installments at $381 per month
  • RHB Renovation Loan: 5.8% monthly rest, installments at $385 per month
  • Maybank Renovation Loan: 5.38% monthly rest, installments at $381 per month
  • CIMB Renovation Loan: 5.37% monthly rest, installments at $381 per month
  • DBS Renovation Loan: 4.88% monthly rest, installments at $376 per month

Still unsure of which renovation loan to take? Well, it really depends on your financial situation and the type of HDB you’re taking out the loan for, so do sufficient research before committing to a loan!

Interior Designer: The Minimalist Society

Step 3: Pay as you progress

Have you heard of the couple that paid $63,000 for renovation works that were never completed? An unfortunate incident, but it is entirely preventable! One way to do so is to have an effective payment schedule with your renovator, where you pay as your renovation progresses. To do that, be sure to check with your renovator on the stages of renovation deliverables, their delivery dates and the progressive payments you need to make on these days. But, always be wary about possible loopholes and avoid these:

BE CAUTIOUS OF EXTREMELY LOW RENO PRICEs

In this industry, money is often equivalent to value and you get what you pay for, dollar for dollar. Often, these “low prices” are but a bait and switch tactic — they would persuade you to pay a deposit to secure the said low prices, but then increase their prices as the renovation goes along, and produce unsatisfactory work.

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NEVER PAY THE FULL DEPOSIT UPFRONT

The industry standard for a deposit is usually less than 25%, and anything beyond that is considered rather excessive. When a lump sum is offered at the beginning, be sure to double check on what’s included as this may not include additional costs for extra fixtures and such. Certain renovators may also have no choice but to change the price of the finishings, especially if there are changes to the product or design along the renovation process (and they are fully entitled to do so!)

So, whatever your dream home design may be, it can become a reality as long as you plan your finances well! 💰

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