A home renovation can be an exciting opportunity to truly make a space your own. It’s a chance to showcase your personal style and create a living environment that suits your lifestyle perfectly. Plus, a strategic one can even increase the value of your property, which is a great incentive if you’re considering selling in the future.&nbsp;But before you dive headfirst into your mood board, it’s important to set aside a realistic and well-defined budget for your home renovation. This budget will not only guide you as you work with your interior designer or contractor on the finer details, but it will also help you make smart decisions when it comes to materials and finishes, ensuring that you allocate your funds wisely.&nbsp;&nbsp;<figure class="image"><img style="aspect-ratio:1140/760;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/b03f765a-ab03-4314-afb8-8e2e120947cf-blob" width="1140" height="760"></figure>&nbsp;There are options out there to help with your budgeting, including a renovation loan or a personal loan. When used strategically, taking out a loan for your home renovation can be a smart way to achieve your dream space without draining your savings or emergency funds. This allows you to maintain your regular cash flow for day-to-day expenses. Loans also often come with fixed interest rates and monthly payments, making budgeting easier and eliminating surprises down the road. Furthermore, they can help reduce stress on the financial aspect of an already stressful process so you can focus on planning your best space possible.Finding the right loan is crucial, however. It shouldn’t just fit your budget, but also be tailored to your profile and financial goals. Loans come with different interest rates and repayment lengths. While a longer repayment term might seem appealing for a lower monthly payment, it can mean more interest paid in the long run. Focus instead on finding a loan that works for your situation, with a competitive rate and a monthly payment you can comfortably afford.&nbsp;If you’re considering a loan for your home renovation, knowing what your options are is key, but most of us seldom do. While renovation loans may seem like the obvious choice, we’ll explain why sometimes, it may not be the best option for some, or even an option to begin with. We’ll delve into the two most common financing options for home renovations in Singapore—renovation loans and personal loans—and lay out exactly what they entail, including new tech-enabled solutions such as&nbsp;<a href="https://sg.lendela.com/?utm_source=renonation_sg&amp;utm_medium=referral&amp;utm_campaign=sponsoredarticle_Jun&amp;utm_content=inline1">Lendela</a>, a loan matching platform that simplifies the loan search, to help you make an informed decision on your renovation financing.&nbsp;&nbsp;<h4>Renovation loans: The obvious choice?&nbsp;</h4>&nbsp;Renovation loans are a type of unsecured loan (i.e. does not have to be backed by an asset) specifically meant for renovation works, covering expenses such as carpentry, masonry, and flooring.In Singapore, renovation loans typically allow you to borrow up to S$30,000 or 6 times your monthly income, whichever is lower. The loan can be repaid over a period of 1 to 5 years. Interest rates vary between different banks, with Maybank offering rates starting from 6.53% p.a. and DBS starting from 5.88% p.a. (EIR: 6.59% p.a.)¹.But there are limitations. Expenses that are not included in the renovation quotation provided by your interior designer or contractor are not covered. This means that costs for home fixtures, appliances and furniture are not included in the loan amount, and will have to be paid for in cash.&nbsp;&nbsp;<figure class="image"><img style="aspect-ratio:1200/800;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/94aaa7a9-7a0a-4300-891a-1b7728064c02-blob" width="1200" height="800"></figure>&nbsp;When considering renovation loans, there are a few other conditions to keep in mind. Typically, you’ll be required to submit a renovation quotation with a 6-month validity to the loan provider as proof of eligibility. This means having your interior designer or contractor lined up before applying for the loan, which could limit your flexibility in timing.&nbsp;Most banks will also disburse the funds via cashier’s order issued under your appointed interior designer or contractor’s name, rather than depositing the money into your account. This can restrict how you use the funds, and changing your interior designer or contractor unexpectedly may result in penalties. Since the initial quote you receive is usually just a rough estimate, the final amount may vary, resulting in the need to make adjustments to your loan’s cashier’s orders.With a 4-room BTO renovation in Singapore easily costing S$50,000 or more in 2024, financing upfront payments for your renovation can be quite the hurdle. While renovation loans are an option, many homeowners don’t realise that they are not the only ones. Personal loans are another financing possibility to consider.&nbsp;&nbsp;<h4>Personal loans: Greater flexibility for reno-hopefuls&nbsp;</h4>&nbsp;Besides renovation loans, personal loans can also be used for home renovations and may, in some cases, be the preferred choice. Many homeowners in Singapore don’t initially consider personal loans because of common misconceptions. But it can be a viable financing option for those who prefer greater flexibility over where the money goes, and overall management of renovation-related expenses.&nbsp;&nbsp;<figure class="image"><img style="aspect-ratio:1200/800;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/174c01d0-6324-4f87-b1cb-ad95a1d9a4a0-blob" width="1200" height="800"></figure>&nbsp;Just like renovation loans, personal loans are also unsecured, so you don’t have to worry about putting up collateral. And despite what many think, they don’t come with sky-high interest rates. In fact, when you compare the<a href="https://sg.lendela.com/blog/what-is-eir-in-personal-loan"> effective interest rates</a> offered by certain banks for personal loans, they are quite similar to renovation loans. For example, UOB offers rates starting from 2.88% p.a. (EIR: 5.43% p.a.), and DBS offers rates starting from 2.68% p.a. (EIR: 5.43% p.a.)¹. Of course, the actual rate you receive will depend on your credit score and repayment capacity.&nbsp;&nbsp;<div class="raw-html-embed"><hr>
 
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</div>&nbsp;One major advantage of personal loans compared to renovation loans is the flexibility they offer. With personal loans, you have the freedom to use the funds for anything you want, not just what’s on your renovation quotation. Yes, this means you can use it on that Japanese-branded WC you’ve always desired as a bathroom throne.&nbsp;&nbsp;For personal loans, the money is deposited into your bank account all at once, giving you the control to decide how and when to use it. Plus, you can apply for one whenever you need it and receive the cash in hours, without any restrictions on timing, making it much more convenient than with a renovation loan application.&nbsp;The amount you can borrow with personal loans usually ranges from 2 times to 10 times your monthly income, depending on your income level and the bank or lender of choice. You could, therefore, potentially get a higher loan amount than with renovation loans. For repayment periods, they range from as low as 6 months to 5 years.&nbsp;Looking for a personal loan can feel pretty overwhelming with all the different choices out there. It’s hard to know if you’re getting the cheapest interest rate or the right loan for your situation. That’s where&nbsp;<a href="https://sg.lendela.com/https://sg.lendela.com/?utm_source=renonation_sg&amp;utm_medium=referral&amp;utm_campaign=sponsoredarticle_Jun&amp;utm_content=inline2">Lendela</a>, a free digital loan matching platform, comes in. Lendela matches you with personalised, pre-approved loan offers from over 40 banks and licensed loan providers with one single application, bringing all your most competitive loan offers to you instead of the other way around. Apart from saving you the hassle of “shopping” for a loan at multiple banks, the platform also guides you from application to disbursement, laying out all relevant loan information for you to make an informed decision.&nbsp;&nbsp;&nbsp;<figure class="image"><img style="aspect-ratio:1200/910;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/f74efcc8-3ddf-4641-81f8-eab34b1dfdaf-blob" width="1200" height="910"></figure><h4>&nbsp;</h4><h4>Renovation loans vs personal loans&nbsp;</h4>&nbsp;See the table below for a straightforward comparison between a renovation loan and a personal loan:&nbsp;&nbsp;<figure class="image"><img style="aspect-ratio:1172/1154;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/017c71dc-9ea8-464a-a143-a983a5a6066b-blob" width="1172" height="1154"></figure><h4>&nbsp;</h4><h4>So should you go with a renovation loan or a personal loan?&nbsp;</h4>&nbsp;In the end, it boils down to what you need and what you qualify for. If you are concerned about managing your finances properly, renovation loans could be a good fit since the funds are directly disbursed to your appointed interior designer and contractor.Just remember to consider the limitations or restrictions tied to a renovation loan, like the S$30,000 limit. Be mindful of where you allocate your funds, focusing on essential aspects of your home renovation.On the flip side, if you prefer more flexibility in how you use the funds for your home renovation, personal loans could be the better choice for you.&nbsp;&nbsp;<h4>Lendela: Finding your ideal loan just got simpler&nbsp;</h4>&nbsp;Definitely check out&nbsp;<a href="https://sg.lendela.com/?utm_source=renonation_sg&amp;utm_medium=referral&amp;utm_campaign=sponsoredarticle_Jun&amp;utm_content=inline3">Lendela</a> and try out their loan matching if you intend to take a personal loan for your home renovation.&nbsp;&nbsp;<figure class="image"><img style="aspect-ratio:1200/630;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/2b3cc946-8c4e-43e2-a45b-445bbb27a33a-blob" width="1200" height="630"></figure>&nbsp;Here’s why:&nbsp;Efficiency and Convenience: Picture this—you fill out a quick application and they sift through over 40 banks and loan providers to find the most competitive options tailored to your needs and profile. It’s like having your own personal loan concierge! Once you’ve chosen an offer, just finalise and sign the loan agreement, then wait for the funds to come through—disbursement can be as quick as an hour when all documents are in order.Transparency: With Lendela, you don’t have to worry about surprises. All relevant information on a loan is presented and explained transparently, including processing fees and charges that are unique to a particular bank or provider. Lendela also provides highly personalised customer service to every borrower, guiding them from application to disbursement and demystifying the loan process. Rates offered by these loan providers are also generated based on a personalised assessment of your unique profile, never generic advertised rates.&nbsp;Privacy and Security: Lendela only partners with banks and loan providers licensed and regulated by the MAS, and applications can be made with&nbsp;Singpass, ensuring the entire loan process on their platform is safe and regulated. They also keep your personal information confidential, only sharing information that is relevant for a loan provider to generate a personalised offer. There’s absolutely no obligation to accept an offer, and your contact information is never shared with anyone until you accept an offer and are ready to receive your funds.&nbsp;<figure class="image"><img style="aspect-ratio:1200/892;" src="https://d213h1b7vxzzl3.cloudfront.net/staging-editor/6c8018a6-032f-4f1c-8da0-fd6dd0868085-blob" width="1200" height="892"></figure>&nbsp;Reliability: Their impressive track record and stellar 4.9/5 rating from over 800 Google reviews speak volumes about their reliability. Don’t wait—over 200,000 customers have already benefited from their unique loan matching model.&nbsp;For more information on Lendela and loan matching, visit<a href="https://sg.lendela.com/?utm_source=renonation_sg&amp;utm_medium=referral&amp;utm_campaign=article_reno_vs_personalloan&amp;utm_content=inline">&nbsp;</a><a href="https://lendela.com/https://sg.lendela.com/?utm_source=renonation_sg&amp;utm_medium=referral&amp;utm_campaign=sponsoredarticle_Jun&amp;utm_content=inline4">https://lendela.com/</a>This post was brought to you by Lendela.¹ All interest rates are accurate as of&nbsp;12 June 2024&nbsp;and are subject to change.&nbsp;

Financing Your Home Renovation: Is a Renovation Loan or Personal Loan Better?

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