26 Jul 10 Things You Must Know About Financing Your Reno And Furnishing Your Home
Whether you are a new homeowner or an existing homeowner, you may consider renovating your home at some point. If you have lived in your home for a number of years, it’s always nice to upgrade.
If you have just bought a new home, you may like to do it up the way you have always envisioned your dream home to be. Before you start your renovation however, it would be wise to do some research to understand what it will cost you.
Renovations are expensive affairs—depending on the work required, it can cost from a minimum of $20,000. It is wise to have an idea of how you can go about financing your home renovations. Read on for more information.
1. Be wary of hidden costs
Source: Vegas Interior Design
Note that a renovation quotation given to you by your interior designer or contractor usually include materials such as tiles and cabinetry works (and do no usually include fixtures such as basins, faucets and water heaters).
However, if you prefer a certain look for your walls, floors and kitchen counters, some materials might be priced higher than the standard ones. So if you choose premium materials, be prepared to pay more than what has been quoted to you.
2. How much it will cost
Source: AC Vision Design
The first thing anyone should do before starting a renovation is to set a budget. It may sound easy, but setting a budget takes a bit of research and soul searching.
Read articles and ask around to find out how much basic works, such as hacking of walls, laying of tiles and building built-in carpentry works cost. At the same time, list down the things that you want need in your home.
3. How to get a reno loan
Most banks in Singapore offer renovation loans with interest rates from 2.98% to 5.38%. If you are thinking of overhauling your home, then going this way is the best.
Reno loans give you 6 times your monthly salary or $30,000 depending on which is the lowest. To apply for a reno loan, you’d have to first select a contractor or interior designer and obtain a quotation as you will need the actual quotation when applying for a reno loan.
4. Renovation loan vs. personal loan
While it may be tempting to get a personal loan to help with financing your renovation, take note that interest rates for personal loans tend to be higher. Personal loans start with interest rates at 7.10%—that’s more than double the lowest interest rate for reno loans! So think carefully before you sign on to a personal loan.
5. What if renovation fee is above loan amount?
You may not anticipate this but it happens. That walk-in wardrobe that you envisioned in your master bedroom—that may cost more than you set aside for.
Things like hacking of walls and floor tiles, and installing custom cabinetry can add up.
When the designer hands you a quotation above what you qualify for, the first thing to do is to assess what works need to be done and what can be left for another time.
It is not advisable to dip into your savings or apply for a personal loan as you may spend beyond your means. Buying your first home can be an expensive affair but you can always take your time to build a perfect nest.
6. Using 0% interest payment plans for homeware and furnishing
This is a good avenue to tap into if you need to buy furnishings and appliances for your home. However, before you go crazy at the furniture megastore picking out big ticket items, it is essential to understand what 0% interest offers mean.
For instance, did you know that 0% interest payment plans actually deduct the entire amount of the product from your credit card? So if that shiny new LG fridge costs $6,000 that is the credit amount deducted from your credit card.
Also, banks charge administration fees ranging from 3-5% if the purchase is made under a non-participating merchant. Read the terms and conditions of all 0% installment plans carefully before going ahead with a purchase via this method.
7. Additional costs like haulage and mover fees, delivery
Renovations are expensive. And if you can cut cost in any way, you should do so. Things like delivery of furniture and movers add up to your total cost. If you can, try and negotiate with suppliers and merchants for free delivery.
The same goes for haulage costs. The price for haulage is set at $215 plus GST. This is the amount paid to contractors directly from HDB.
8. How to set budget for furniture
Source: De Style Interior
While you may have an idea on what you want to do to your home, the budget may be something else altogether. These days, with renovations costing as much as $60,000 for HDB flats, it seems that having a beautiful home is a pipe dream.
But having a comfortable and livable home should not be just for the rich. Be very firm with your contractor on your budget. Say if you only have $15,000 to spare for doing up your home, let him know from the beginning.
There are certain things that you can forgo—usually things to do with aesthetics. Things such as fixing leakages and broken fixtures should take precedent.
9. Some things can be completed at a later stage (like furnishing the second or third room)
Source: Interior Doctor
This is a strategy taken by many homeowners. Leave out furnishing a less frequently used room for another time. This will allow you to save up enough money while fixing the most important areas of the home first.
10. Cut costs by buying multifunctional furniture
We all love multifunctional furniture. That sofa that turns into a bed may come in handy one day when you have guests staying with you. And that storage box that also works as a bench is not only great for keeping your home tidy, it also serves as seating at your dining table.
Getting such furniture stretches your dollar, allowing you to put your money into more essential needs.