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Saturday, 17 January 2015

Renovation Loan Malaysia : How to Finance a Renovation

Renovation Loan Malaysia : How to Finance a Renovation

When thinking about interior design, home renovation costs can be much higher than expected. These costs largely depend on the aspects of the house that are to be improved. If the renovation costs are too high, choosing the means of financing the renovation can be very difficult. The following sections explain the different means which you may apply to finance such a project:

Use your cash at hand or sell your unnecessary assets.

This option is also suitable for low-cost home renovation projects. Instead of interfering with your savings or the accrued interest, you can use the ready cash that you have to fund the project. If your ready cash is not enough, you can consider selling unnecessary assets and use that money to fund the remaining costs.

Borrow loans from financial institutions.

There are 4 types of Bank Loans to renovate your home:

1) Renovation Loan - This loan usually available to apply when you are buying a house and financing your property from the bank. It's bundle together with your home loan. Most of the bank will not entertain for existing home loan customers to apply for a renovation loan.

2) Top up loan - Talk to your existing financier to get extra cash out based on the Current Market Value of your property.

3) Personal Loans - It's available from most of the bank but the interest rate is high.

4) Credit card Cash on Call - Talk to your existing financier to get cash from your existing credit card limit, the interest rate usually is much better than personal loan.

Although this is certainly not the best option, you may be forced to choose it if all the other options available to you cannot fund the entire project. The main problem with this option is that it can raise the costs of the renovation by a very large amount because the loan must earn interest if it is borrowed from a financial institution. It is therefore a wise decision to combine this option with another option. You should use this option to top up the amount that you have raised from another option.

Generally, borrowing loans is discouraged. If you must borrow some loan, you may consider mortgage loans whose repayments are spread over a sufficiently long duration. The advantage of mortgage loans is that their interest rates may be much lower than the interests charged on personal loans.

Image source from: Chimporchamp.Design