If you’re looking to get your home renovated, one thing that may be on your mind is how you’re going to pay for it. You need to put a little thought into the financing of your renovation, because its likely going to be a more sizable outflow than your usual monthly outlay. From a financial advice perspective, your choice between a home renovation loan (or EMI) and using your savings should be based on comparing the ROI you’re getting with your money in the two cases.
Renovation loans can be of three types: a personal loan (highest interest rate 15-18%), home loan top up (8-10%), and a home improvement loan against your property (slightly higher than a home loan top up). Interest rates are a ballpark, you will need to speak to a representative to understand what rates you can get based on your personal situation.
Apart from helping you with your home renovation project, BuildingBlox can also help you with a loan or EMI option. BuildingBlox is partnered with some of the major banks and financial institutions to provide you with this service. Following our rough estimate for your home renovation project, if you have requested to learn more about financing options, our team will connect you to the appropriate financial representative who can take the conversation forward. They will understand your situation and financial needs and tell you about the possible options and interest rates.
When planning your home renovation, something to be mindful of is the timing of your cash outflows. Typically a project requires 40-50% of the budget up front, another 30% in the middle, and the remaining at the end. Keeping this in mind you may need to work out your liquidity situation to cover the outflows when needed. Also budget for a small contingency fund of 5% of your project budget as reserve, because during the course of a project you discover certain changes you want and the project scope tends to increase.
If you’re considering a home improvement loan there are a few questions to keep in mind before you have a conversation with a financial representative. First, do you have an existing home loan? Second, do you have any collateral you are willing to put up against your home renovation loan? And finally, are you the owner of the property where the renovation is going to take place? Each of these will form the benchmark for your loan options and interest rates.