Home & Living

How to Renovate Your House Without Spending Your Children’s Inheritance

Once you’re past the age of 30, having your entire home consist of one beanbag, a mattress, and a broken floor lamp is no longer acceptable. You need to “do up” the place, like you see in fancy magazines.

And while many websites explain that you shouldn’t worry, and you can have a designer interior at a low cost, we’re here to tell you that’s a filthy lie. Renovations are expensive. You’ll probably be living on Maggi mee for months after they’re done.

Here’s how to mitigate some of the financial damage:

1. Never use a personal loan to renovate

Common mistakes made by Singaporeans are overpaying for furniture, thinking Ah Boys to Men is a good movie, and using personal loans for renovations.There is a specific loan for renovations, which typically has an interest rate of around five to six per cent per annum. Personal loans, on the other hand, tend to reach nine per cent per annum (barring any special promotions). A renovation loan is almost always cheaper than a personal loan, so you should use renovation loans first.You use a personal loan to make up the difference, when the contractor busts the budget and the renovation loan is not enough.

The key word in that last sentence is “when”. Not if. Plan for the contractor to go overbudget by around 20 per cent.

Incidentally, you will notice most contractors like to propose budgets around the $30,000 range. This is because $30,000 is the limit on most renovation loans ($30,000 or four to six times your monthly income, whichever is higher).

2. There are many QUALITY versions of furniture that look alike

If you see designer furniture that you like in a magazine, there are two ways to obtain it. The first is to become the CEO of Microsoft, and then buy it with your paycheque. The second is to find high quality alternatives, that look alike.This is not the same as finding a knock-off. Many respectable, high quality versions of the Eames chair exist, for example, and most of them don’t cost $5,000 per butt seat like the original.One method is to have your contractor make a custom version, based on the picture in the magazine. The other method is to check out sites like ezbuy.sg, to browse affordable alternatives from around the globe.

(And with Prime shipping, you can get it delivered for just $2.99).

3. Try not to wallpaper

Wallpaper tends to peel or warp in hot, damp, environments. The best examples we can think of are gym socks, arm pits, and the daily weather in Singapore.You can paint an entire five-room flat for around $1,500, but wallpapering a single living room can easily cost twice that amount. On top of that, the wallpaper doesn’t last long. When you need to replace a torn piece, you might also find that design is no longer in production (although you may be able to find it again with ezbuy’s help).We’re not telling you to avoid wallpaper altogether; but try to minimise the use of it to save money. Also, don’t ever use gold wallpaper. It’s your house, not a KTV parlour.

4. Nag the mortgage banker / broker for a deal

If you just got a home loan, try to nag the mortgage banker (or broker if you used one) to get you a better renovation loan. Sometimes, they can pull strings to get you a special offer. For example, you might be able to get six months’ interest free on the renovation loan.In any case, we suggest you always ask a mortgage broker when looking for a renovation loan. Not all of them do it, but the ones that do can find you the cheapest deal in 15 minutes.

5. Never pay everything upfront

When negotiating a deal with the contractor, avoid paying everything upfront. In the event that the contractor closes down before finishing work, you’ll be left with no money, and no renovations. That is totally a thing that happens, by the way. On top of that, holding back some of the cash gives you leverage, in case your contractor underperforms. Withholding some cash  works wonders in preventing four hour lunch breaks, or two week “supplier delays”.In an ideal scenario, the contractor will agree to a progressive payment system, in which you pay as each phase of work is completed.

6. Ensure your contractor is properly insured

Ask who ensures your contractor, and make sure it’s a real insurer. If your home is damaged during renovation, your home insurance generally will not pay out. In Singapore, damage caused by renovations are claimed from your contractor’s insurance.In the event your contractor allowed their insurance to lapse, this could leave you with broken pipes or incomplete flooring for months. As an aside, remember you can be liable for damage caused to your neighbour’s house as well. So pick a legitimate, properly insured contractor.

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