Right. So you’ve got a new home and it needs some sprucing up. You’ve got ideas turned into plans and everyone’s ready to go. So, short of discovering you’re heir to a mountain of gold, how are you going to pay for it all? Here are some ideas, starting from the least interest-laden to the most.

Savings

If you’re young, single and reading this, SAVE NOW! Forget the Guccis, Rolexes, and Ferraris. Cash is the single most accessible form of funding you have. Free of any interest, fees, or charges, you are beholden to no one when using cash.

For the older, more responsible ones, you’ll call these savings a.k.a. emergency funds. Short of a zombie apocalypse, this is what will bail you out of most financial trouble. Use only what you absolutely need and don’t dry it all up. Because, y’know, a renovation is technically not an emergency.

Taking a Loan

So you’re plum out of cash and you can’t sucker your family and friends to help you out. Loans are the next best thing, short of robbing a bank (no, just no). Here are your choices, in order or preference.

1. Home Renovation Loan

This should be your first stop where loans are concerned. Interest rates come in at an affordable 5.3% to 6.2% annually with loan tenures ranging from 1 to 5 years. Banks are happy to hand out these loans even to folks with mediocre credit scores. Why? Because they keep track of everything you’re spending it on. EVERYTHING.

The downers are that renovation loans are capped at $30,000 or six months of your income, whichever is higher. Despite the fact that it’s your loan, the money goes directly to your contractor AND it can’t be used for accessories like furniture and curtains – that money needs to come out of your own pocket. Basically, it’s like being a kid again with parents holding the purse-strings.

2. Personal Loan

Second stop: personal loans. Pretty much when the renovation loans aren’t enough. And they usually aren’t (see: renovation loan cap). Can’t get furniture and other accessories with that. However, with personal loans, you have more freedom with your spending. 

The downside? Higher interest rates. How high? Up to 10% per annum. If you take personal loans, be sure to have plans to climb the corporate ladder real fast! 

3. Credit Card Loan

Technically not a loan but you are still spending money you don’t have with credit cards. That said, it’s incredibly accessible money. 

There is a HUGE difference though. Pay your debt quickly before the next billing cycle or that 26% per annum interest will kick your debt up higher than the Burj Khalifa. It’s risky so only use it for stuff you can pay off quickly.

4. Store Loan

Provided by the store itself, these are pretty easy to get approvals for just so you can pick up that darling sofa you saw. 

That caveat? Easy approvals come with a price. Massive interest rates, some reaching up to 36%, put credit cards to shame and put you into the poorhouse if you’re not careful. 

Spend Smart

Cash is king so the saying goes. And there is truth to it. It’s the least likely to become a debt you can’t afford. However, if you don't have enough on hand and bribing friends and family to help doesn’t work out, loans are your best bet. Just be mindful that loans have interest so aim to get one with the lowest ones first before progressing to other loan options. And no, robbing a bank ISN’T an option.

Posted on 17th June 2022

Kenny Tan, 

SIXiDES Editorial Team