How can getting an interior design loan possibly be more painful to you that it is now? Many people make expensive mistakes, which they would have easily avoided when taking a loan to renovate or furnish their homes. Individuals who borrow without doing their homework properly often end up spending more than they should, and in most cases that extra expenses can really hurt them. You will have to face the renovation challenge at some point, whether you are an existing homeowner or a new owner. Upgrading your home after living in it for some years is always a nice idea. If you are a newbie, you may like to make your new home look like your dream home.
Depending on what you need, financing an interior design project in Singapore can be an expensive affair. In fact, it can cost you a minimum of $20,000. As a result, there is a need to go for the interior design loan to finance your home renovations.
This article aims to provide guidance on the right direction when you are undertaking an interior design project. It will reveal the seven most common mistakes that homeowners makes when getting interior design loan. You will ultimately escape burning a hole in your wallet as well as saving yourself plenty of unnecessary pain by avoiding them.
1. Undertaking an expensive interior decoration than one cannot afford
Many homeowners over commit themselves financially by borrowing beyond their limit in order to support a home interior décor project. A significant portion of their salary then goes into paying off the debt over a few years, which tend to be stressful for many. In some cases, the expenses overstress their budget such that they consider holding the project off until they are more financially stable. Before settling for the loan, your first consideration should be the amount of money that you can afford to pay for the furnishing or renovation project without spending beyond your means. It is a wise idea to spend conservatively, especially if you are a first-time homeowner. Go for a budget that does not overburden you with a large interior decoration loan. It is not the right decision to take a big loan amount just because you qualify for it.
2. Temptation to get a personal loan
Many individuals are tempted to get a personal loan for financing their interior design projects, as it is easier to get one. However, they fail to note that the interest rate on such loans tends to be higher. Personal loans in Singapore start with interest rates of about 7.10%, which is more than twice the interest of some other renovation loans. So, you need to think carefully, when signing on to personal loans. On the other hand, you can get renovation loans from most of the Singapore banks with interest rates from 2.97% to 5.38%. Therefore, it is a better way to go if you are thinking of decorating your home. In addition, most of these loans can go up to $30,000 or six times your monthly salary depending on which is the smallest.
3. Not getting involved during loan application
Many homeowners think that taking the interior design loan is a time-consuming, confusing and complicated process. However, it is indeed a good idea to have adequate knowledge about borrowing as the various lenders offer deferring interest rates. A good renovation lender should clearly lay out all the relevant information to you. You should receive an outline that gives explicit detail on what is expected of you from application to close.
4. Not comparing quotes from several contractors
The next important step that many homeowners overlook is to go around shopping for quotations. After you have worked out the appropriate budget for your interior design project, it the time request for an itemized quotation that indicates the costs of all elements of the project. Asking for a cost breakdown will also make it easier for to decide to either add or take away items in order to achieve your budget. It is quite recommendable to shortlist at least four candidates and get their quotes. Following this, it requires you to spend some time to speak and contact potential contractors to get this information. However, it is usually wise to compare other things like workmanship quality, reputation, and reliability before going blindly for the lowest quote. Contractors offering extremely low quotes could mean that they have an inadequate experience to do the job or quote it correctly. Also, they could do some corner cut during the job or have hidden charge, and thus giving the under quotes to undercut legitimate competitors.
5. Not being prepared in case the anticipated fee exceed the loan amount
Many homeowners fail to foresee this, but it sometimes happens. The walk-in wardrobe that a homeowner has always envisioned in his or her master bedroom may cost more that he or she has set aside. Things like installing custom cabinetry, and floor tiles and hacking of walls can add up. It is better to assume that your interior decoration costs would likely surpass what you have initially planned. At some point, you may change your mind about the materials, or you may be carried away to choose a bit expensive items such as the wood type or floor tiles.
6. Acting the role of the interior design
Some homeowners are thinking that it is a good idea to minimize their interior design loan by performing the role of the interior designers by themselves. They assume that designing and decorating their homes is an easy task. They end up wasting much of the resources before they can realize that there is a lot more work to be done. Hiring an interior designer is worth the little gold. Many interior design firms will assign an expert to help you makes practical use of space within your home and decorates it for you. They can also advise you on approaches to save money in a case you have a tight budget, and can recommend options you have not considered.
7. Overstraining to finish everything at the same time
Some homeowners fail to admit that they need to complete some things such as furnishing the third room at a later stage.
This can be an excellent strategy if you are on a tight budget. You can always leave out furnishing a room that you use less frequently for another time. In this way, you can first fix the most critical areas while still being financially stable. This approach will also prevent you from applying for a personal loan or dipping into your savings, which can make you spend beyond your means.