There is the impression that home renovations can be costly, but nowadays, it’s so easy to find businesses that can cater to your specific tastes and budgets. So if you think that the enhancements can increase the value of your property, or you just want to breathe life into a tired space, there are many options where you can procure the funds necessary.
1. Credit Card
Using a credit card to finance home improvements may be a good option if you’re looking at smaller budget projects like plaster ceilings, feature walls, or home storage additions. It’s quick, and it’s easy. Some credit cards provide unlimited cash back on their retail purchases so you could buy new paint, furnishings, or even wardrobe storage and receive cash back for your home upgrade!
However, before you make any credit card spending, please check on the incurred interest rate to make sure you are able to afford the coming payment.
2. Personal Loan
What is fantastic about a personal loan is that it is flexible, also has a quick approval process, and in Malaysia, generally unsecured, meaning there is no need to put up your property as collateral. So taking out a personal loan is a good choice for financial help if you want to refurbish your home without the hassle of giving collateral or security such as fixed deposits, unit trusts, or other assets.
Most importantly, check the interest rate that comes with the loan. Make sure you make your own calculation before you take the loan.
3. Home Refinancing
When people mention home refinancing, they may be referring to one of two types. First, refinancing can be placing a mortgage on your property free from encumbrances; the second is mortgage refinancing, which is to take out a new loan with a fresh set of terms and conditions to replace your current loan.
What are the benefits of doing this? For one, you would be getting lower interest rates compared to credit cards and personal loans. Your loan tenure may be shortened so you can pay off your loan sooner, meaning lower monthly instalments over a shorter period, which will lead to apparent ease in your cash flow.
4. Overdraft Facility
Overdraft facilities are a line of credit that you can access through a current account. This type of facility is similar to how a credit card would work, where the customer may withdraw cash up to a specific credit limit allowed by the bank.
Overdrafts can be either secured or unsecured, depending on what is available in different banks. Secured overdrafts will yield better interest rates as opposed to those unsecured.
This pick allows for enhanced financial flexibility as there is typically no limit on tenure, funds are available anytime without the need for further approval, and you can withdraw as much money as you need (within the credit limit) and as many times as you need. The interest rates are higher than that of personal loans and mortgage refinancing, but the advantage is that you are only charged interest on the amount you use.
Thus, if you are already in a line of work that requires frequent access to significant capital, like an investor or a businessman, applying for an overdraft facility for your home renovation on the side may be a good idea for you, but not so much for an average salaried worker.
