30 Jan 5 Things to Consider Before Applying for a Home Renovation Bank Loan
Home renovation is definitely an exciting affair. After all, who doesn’t want to see her home in a brand new avatar! However, there is something that can really put you down during the process. Bank Loan, although, is a very useful way out for those who don’t have enough funds to support their renovation, but getting easy loan approval still remains a challenge. Following are a few things you need to consider before applying for a bank loan for home renovation. Let’s have a look:
Eligibility: In order to get loan approval, you need to meet certain eligibility criteria as mentioned by the bank. This includes your age, credit score, annual income and more. Not only with the renovation loan, but for every kind of loan, the bank will require a valid proof of your financial status to ensure that you are capable of repaying the loan. Hence, before applying for a loan, make sure that you have a good credit score and have all the valid proofs in place to support your documents.
Fixed Vs Floating Rate: Interest rate is one of the most important factors you need to consider when choosing a home loan. These interest rates are further categorized into fixed and floating. In the case of fixed loans, interest rates remain same throughout the loan period. On the other hand, in the case of floating loans, interest rates change during the period and are generally pegged to a benchmark rate. Although fixed rate loans are more costly than floating rate loans, it is a better option because it lets the borrower plan his finances. Check out the interest rates offered by different banks and then go for the one that offers lowest with flexible terms and conditions.
Penalties and other charges involved: Before signing the loan agreement, you also need to understand the penalties and other charges involved in the process. These charges include late payment fee, default payment penalty, Early repayment fee, Cancellation fee, and Disbursement fee. Ask your lender about these charges and make a decision accordingly. You need to be aware of all these conditions beforehand to avoid shocks and surprises in the future.
Processing fees: Almost every lender charges 1% processing fee. While some banks provide you the option to pay this fees by cash, the others will deduct this fee directly from the loan amount. This fee covers charges involved in processing the application including property appraisals, credit checks, documentation, and basic administrative costs.
Extra benefits: Many banks offer extra benefits to their customers in order to sweeten their home renovation deal. Many offer free personal accident insurance, furnishing loan, variable interest rates for 1st, 2nd and subsequent years and other free gifts.
The Bottom Line
Hence if you are looking for a home renovation loan in Singapore, keeping these things in mind will protect you from the hassles of process. Research on your own and look for different options. Don’t hesitate to ask your lender about different programs and benefits offered by them.