Differences Between A Home Renovation Loan & A Personal Loan

 


You want the best for your home – it’s only logical. So, when you decide you want to renovate, you’ll need to find the solution for a dream remodelling within your budget.

Pro tip: Having a budget is crucial even (more) when you get a loan.

But half your problems are solved if you get the correct financial assistance.

Are you considering a renovation loan or a personal loan? What are the differences between them? Read our article to understand more.

What Can You Do With The Loan Money?

Renovation loans are solely intended for renovating your apartment or house. That means you can’t apply for a renovation loan and use the money for something else.

For example, you can’t even use $100 from that amount to treat yourself to a bottle of wine when your apartment’s renovations are through. Or a bottle of Tequila when your contractor suddenly announces something went wrong.

Things get worse:

Traditional renovation loans can’t be used to purchase new furniture or decorations, even if these items technically regard your home’s remodelling.

Of course, some licensed moneylenders in Singapore offer some of these facilities within their loan, but other conditions may apply.

By comparison, personal loans look like a breeze of freedom:

You can use them for whichever purpose you want.

The bank’s not going to check how you’re using that money, and even better:

The funds are wired directly into your bank account. By comparison, renovation loans are wired into your contractor’s account.

 How Much Can You Borrow?

A renovation loan from the bank allows you to borrow up to six times your monthly income or up to $30,000 – or whichever is lower.

That means if you’re earning $6,000/ month, you can’t obtain $36,000; you’re limited to that $30,000.

However, certain financial institutions offer greater renovation loan amounts that are greater than $30,000! CreditMaster is one of them and you can apply here.

Again, personal loans seem to take the cake in this category too because:

Most licensed moneylenders will grant you 4-6 times your monthly salary. So, if you’re earning over $5,000/month, you can obtain more than $30,000.

Some banks in Singapore can offer personal loans up to ten times your monthly salary if you come from a high-income class and have an excellent credit rating. In fact, we’re betting you can obtain even more if you’re Jeff Bezos-wealthy and have a good relationship with that bank. But for us regular folks, it means you can receive $60,000 if you have a $6,000 salary.

Pro tip: Make sure you need that money before applying for a loan. It’s never a good idea to borrow more money than it’s actually required because you fall down a slippery slope of bad debt.

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