Adulting is fun and all that, but it also comes with some of the biggest expenditures that you’ll be facing: weddings, buying your first home, and renovating it. Being penny wise and pound foolish is definitely not what you want to be, so if you’re planning on nesting soon, here are some tips for you to afford your dream home renovation on a budget.
1. Start saving early & automate transferring 20% of your earnings to a separate account
We’ve all heard of the 50/30/20 rule: allocate 50% of your monthly take-home to needs, 30% for wants, and 20% for savings and investments. When you have a home renovation on the cards, you may want to look at spending 10% less on needs and wants, so you direct 20% of your salary to building a reno fund. We highly recommend doing this in advance so you can build up your savings for the renovation.
How you can leverage on these savings is to set up a separate account, and automate transferring a portion of your earnings to this account each month. This way, you’ll be certain that you won’t accidentally dip into this renovation fund━plus points if you set it up as a fixed deposit account, which typically offers higher interest rates than a savings account, though rates and terms can vary based on market conditions.
Not only are you saving up for your renovation, you’re also growing that sum of money in the time leading up to it. The sooner you start on this, the more time you have to grow your pot of savings.
2. Create a budget and stick to it
Above all else, and to round up this series of tips, is the all important budget. It’s imperative that you consider what you can afford to set aside, loans included, in coming up with a budget for your home renovation, and more importantly, to stick to it.
In looking at a budget, think about areas where you can cut costs, bearing in mind that you wouldn’t want to compromise too much on quality. For example, one way of cutting down your budget is to minimise the number of built-ins in your new flat━carpentry is one of the biggest spends when it comes to renovations.
You could also plan ahead for a furniture shopping trip in JB, and go for cheaper alternatives such as overlaying tiles, rather than hacking the old away. Alternatively, get less done with an ID, and roll up your sleeves for some DIY projects in your new house. If you’re not cut out for the DIY route, skipping the middleman, AKA the ID, and going straight to various contractors could potentially help you save 20-30% on reno costs.
With a set budget, you’d be able to see how much you can spend on each component of your renovation: where you can afford to splurge, and where you can look at cutting costs.
3. Negotiate with your ID for a better deal or alternative repayment plans
Before picking the ID that you want to go with for your home renovation, it’s a good idea to pick the brains of several designers at different firms, and get a detailed breakdown of the estimated costs with the materials involved. This allows you to compare prices across the board, and go with the one that suits your style and budget best.
When you have a basis for comparison, you’re better able to negotiate with your ID for a deal that benefits you more. This involves going into the nitty gritty, and whittling down costs such as haulage and disposal fees, or asking your ID for vouchers or discounts from their partner suppliers. Offering more upfront payment might also be able to net you savings of a few percent━which makes a difference in the grand scheme of saving money.
4. Take a personal loan
Image credit: DBS
Even the best laid plans can go awry, and we totally get it if saving up for your home renovation doesn’t go as planned. Perhaps you aren’t able to compromise on the 50/30/20 rule━but that’s okay too, because you can take out a personal loan, such as the DBS Personal Loan, to help you realise your home renovation dream.
Instead of having to wait some time for the bank to assess your loan application, you’ll get instant cash in your account if you apply for a DBS Personal Loan, and a super easy application process. Simply provide your income documents when you apply via Myinfo with Singpass, which you can even do through digibank mobile, and have your Loan approved stat.
Of course, loans don’t come free, so you will definitely need to factor in extra budget to pay for this. In the case of a DBS Personal Loan, you’re looking at interest rates from as little as 2.68% per annum, with a 1% processing fee.
What’s more, you can borrow up to 10 times your monthly salary, and you have the flexibility to pick a Loan tenure that fits your repayment capabilities. FYI, the minimum Loan tenure for a DBS Personal Loan is 6 months, and can go up to 5 years━to make it more convenient, you can arrange for the monthly repayments to be automatically deducted via GIRO.
Here are some numbers to put things in perspective: a Personal Loan of $80k, paid over the maximum of 5 years, would require a monthly repayment of $1,512━a much more palatable figure than forking out a full $80k at once. Put in your numbers and have a look at your projected monthly instalments using the Monthly Repayment Calculator on the DBS website.
Financing your dream home reno on a budget in Singapore
It’s not all doom and gloom even if you’re making less than the median gross monthly income in Singapore. You still can pay for your new home and the reno of your dreams with some careful calculations and planning.
If you’re still thinking about applying for that DBS Personal Loan, here’s an additional perk that might nudge you along the decision-making process: input the promo code “DBSUCHIFY” when you’re applying, and get 2% unlimited cashback on your Loan. Do note that this is only valid for applications before 31st January 2025, and on loan amounts of $5,000 and above, with a minimum loan tenure of 36 months. You could also score an immediate $60 cashback if you’re a new Cashline applicant. Terms and conditions apply.
Find out more about a DBS Personal Loan here
Cover image adapted from: Three Haus Works
This post was brought to you by DBS.
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