Financing Your Renovation
For those of us who do not have the extra cash at hand, financing your home renovation will always be an issue. The first taught that comes to mind is the high cost of interest charged by the banks, especially when it comes to Personal Loans.
For those of us who are thinking of buying a new home please do you research! There are banks who currently package an over draft facility on your loan, giving you flexibility to withdraw from the amount paid while enjoying the low interest rate offered by home loans, we shall discuss this further in another topic.
Don’t despair! Don’t resort to Along help, they just spell TROUBLE!!!
I had come across several websites of prominent banks that offer personal loans that charge either a flat interest rate or compounded interest rate that range from 7% to 10%. Whichever way you try to look at it they lead to the same conclusion, the rates imposed are still higher then home loans. The reason for this is that personal loans do not need a guarantor and the risk by the banks is high.
1. OCBC bank has a loan called Home Xtra which can be applied for renovation works. The current interest rate starting at 8% (fixed interest). OCBC interest rate starts at 8.5% and up subjected to your credit rating and salary scale (Salary above RM10k, enjoy a rate of 8.5%).
2. Bank Islam Personal Financing-i provides personal loan at a rate of 6.8% to 7% flat up to 7 years financing period. But if you are a Civil Servant or a Medical Practitioner you can enjoy a rate up to 5.1%, I think this is a good deal. But however check out their terms and conditions which is stringent.
3. City Bank is currently offering a rate of 11.5% fix interest rate on personal loans.
4. Standard Charted Bank is offering 8.5% and up, subjected to credit rating and salary scale.
5. Or else if you already have a current Housing loan and making monthly payments, you could seek advise form the bank’s Mortgage Officer on a term loan. It is a loan given on top of your existing home loan but as a separate account. The amount of loan is subjected to the property current value and amount you have already settled with the bank on the existing loan. At this current period you should be able to enjoy an interest rate ofBLR + (-2%). Current prevailing BLR rate is 5.5%
Before securing any kind of loans, please
do your maths. Determine how much you intend to borrow, what would be the cost of renovation and what is your budget. Always bargain for the best price and compare it with other contractors.