Unsure if you should take out a personal loan to renovate your home? Here’s a list of pros and cons to help you decide:
1. It can be considered ‘good debt’
There is such a thing as good and bad debt. Borrowing for a renovation can be good debt if it will increase the value of your home. In fact, certain changes like remodelling your kitchen, landscaping and adding space to your home can drive its value up.
2. Upgrading can save you money
Upgrading with green tech in the home like solar panels, energy-efficient lighting and heat-deflective roofing will save you money in the long run e.g. with utility bills as well as heating and cooling appliances and, etc. You might also want to renovate to upkeep and maintain the home so you can avoid major, costly damage later on.
3. Improve the standard of living and safety
Some renovations are not aren’t necessary but it can add to how comfortable you are in your home and that should factor into your decision as well. On the other hand, home improvement projects that improve safety is an absolute necessity!
1. Possibly higher interest rates
It is true that a refinancing loan or renovation loan itself could offer lower interest rates. But do keep in mind that you will essentially be taking on a new home loan and be pledging your property as collateral.
2. Living above your means
This is a concern that most people have with borrowing to make home improvements. You might be tempted to make changes to your home that are unnecessary or that you can’t afford and incur unnecessary debt as you go along.
How to Decide?
If you are still having a little trouble figuring out if you should apply for a personal loan to fund your home renovation project, don’t worry, here are some helpful hints:
Consider a personal loan for renovation if:
- You don’t need a huge sum and are only making minor renovations to your property
- The loan comes with very low interests and affordable repayment plans
- You need the money for emergency home repairs
- You are looking for a convenient loan that is flexible and easy to apply.
Look for other financing options if:
- You are doing major renovations and require a large sum of money (more than RM 100,000)
- You can wait for the loan funds
- You don’t mind using your home as collateral.
Lastly, you might want to hold off on renovations if you can’t afford repayments for either type of loan. In this case, it’s best to play it safe, save up and renovate with cash. Other suggestions that you may be able to make are small modifications or try to do it yourself (DIY). An example of a store that sells hardware at affordable prices is Mr.DIY
If you’re a civil servant and have you’ve decided to go forward with a personal loan to renovate your house, why not consider a koperasi loan that is based on Shariah concepts? Apply now for affordable rates and potentially quick access to your loan funds!