After taking the keys to your new home, it is very natural that you would want to start renovating as soon as possible. While this can be an exciting time, it’s important to remember that a renovation is a major financial undertaking and how to finance renovation is something you need to critically think and plan for with your partner.
Here are a few things to keep in mind before you make the commitment to start your renovation.
Plan your renovation budget
First and foremost, you’ll need to create a budget. Determine how much money you have available or how much renovation loan you are willing to take up to spend on the renovation.
During your budgeting, do note to set aside additional funds for unexpected expenses in situations of emergency.
Usual Costs of Renovation in Singapore
The cost of renovation in Singapore generally depends on the size and scope of the renovation.
For example, the average cost of renovation for a 3 room new HDB flat in Singapore would cost around $30,000 to $50,000, whereas a complete home renovation of a 5 room resale flat could set you back by $70,000 or more.
You can make use of Qanvast Renovation Calculator to come up with a rough figure for you to do your renovation finance budgeting.
Average Cost HDB
Average Cost Condo
Average Cost Landed
Compare Quotes from Multiple Vendors
If you’re working with a professional interior design company instead of a contractor, they will typically charge 10% to 20% of the total project cost as their project fee. So if your renovation project costs $70,000 in total, you can expect to pay a contractor anywhere from $50,000 to $60,000.
It’s also important to get multiple quotes from interior designers or contractors before making any final decisions. You may be surprised by how varied the quotes can be from different companies.
Financing Your Renovation
Once you’ve created a budget and found a vendor you’re comfortable with and is able to work within your budget, it’s time to start planning how to actually finance your renovation.
Payment for renovation typically happens in phases. Usually companies will expect a 10% down payment to produce the 3D rendering artworks and apply for the renovation permit. Another 40% is required to kickstart the actual renovation process and another 40% is expected towards the last phase of the renovation. The final 10% is payable upon final acceptance of the renovation work.
How to finance renovation: A few ways
Renovation loans from Major Banks
If you are seeking financial assistance, one of the most popular ways to finance renovation is through renovation loans from major banks. In usual circumstances, you will be able to get up to $30,000 from a bank for renovation loan per person.
For example, both you and your partner will be able to obtain 2x $30,000 loans from DBS and another 3x $30,000 loans from OCBC; subject to eligibility and the banks’ approval requirements.
Renovation loans from Licensed Moneylenders
If for any reason, you are unable to obtain loans from major banks or the application process is too troublesome for you, you can consider obtaining renovation loans or personal loans from licensed moneylenders. Licensed moneylenders, unlike loan sharks, are regulated by the Ministry of Law in Singapore.
Borrowing money from licensed moneylenders is a much more simplified process as compared to the banks. Approval can be done with minimum paperwork. With regulations from the Ministry of Law, licensed moneylenders have a certain limit to adhere to when it comes to interest rates.
Look forward to your new home without unnecessary financial stress
Renovation loan is not just for people with not enough savings. Even if you have enough savings, it is important to set some spare money aside for investment or times of emergency.
Moving to your new home is a major milestone in you and your partner’s life. It should not be a stressful and negative event.
A loan can come in handy to mitigate the stress of financing the house renovation while you and your partner focus on building your beautiful home. Consider getting a free renovation quote from us when you are planning your renovation finance.