A personal loan or a renovation loan are your primary financing choices if you are considering making improvements to your existing residence.
These two types of loans are not to be mistaken for one another because their qualities are highly dissimilar, despite the fact that they can both be utilised for the same goal.
In this article, we will discuss not just the differences between these several types of loans but also how each one operates.
What’s a Renovation Loan?
A renovation loan is a financing option that you can use to pay for a specific renovation project. Unlike some other kinds of loans, renovation loans are not intended for general use; they are designed only for financing renovations or repairs.
A renovation loan will have some key features:
- The amount you borrow will be fixed and known in advance. You won’t have the option of borrowing any amount up to your credit limit like you would with an unsecured personal line of credit. The loan provider will also set a maximum duration over which they’ll lend money–usually either 3 years or 5 years–and if you want longer than that duration then another kind of mortgage may be better suited to your needs instead.
- The purpose behind this restriction is twofold. First, it means less risk exposure on behalf of both parties involved (you as the borrower and the bank/lender). Secondly, because there’s no flexibility around what can be done with money once it has been borrowed during the construction phase we know exactly how much each party should receive at an endpoint.
Who are Renovation Loans for?
A renovation loan is a type of personal loan that you can use to finance the cost of renovating your home and/or buying a new one. These loans are also available to people who want to buy an apartment or condo, as long as it’s located in Singapore.
If your credit score is good, then you should be able to get approved for this type of financing quickly and easily–and at an affordable rate!
How much Money can I borrow?
The amount of money you can borrow will depend on the loan provider’s criteria, but typically a renovation loan is for smaller amounts of money compared to a personal loan.
Personal loans can be used for any purpose and are offered with flexible repayment terms. This means that you can choose how much you want to pay back each month and make extra payments if you wish.
What happens if I don’t pay back my Renovation Loan?
If you fail to repay your renovation loan, there are several things that can happen. First, you will be charged interest on the outstanding balance of your loan.
Second, a late payment fee may be charged as well. Thirdly, if it’s not paid off within a certain period of time (usually 30 days), then collection agencies will be called in to help recover what is owed.
Finally, if all else fails and the lender decides not to pursue repayment through legal means (which could include debt collection agencies), then this information will appear on their credit report which may negatively affect their ability to obtain future financing options like mortgages or personal loans from other lenders
What is a Personal loan?
A personal loan is a type of credit that you take out to pay for things like school fees, home renovations and medical expenses. It’s important to shop around for the best personal loan rate before applying for one so that you can get the most from your money.
Personal loans are often unsecured, which means they don’t require any collateral (like a house or car) as security in case you default on payments.
You can apply for a personal loan online at any time of day or night by filling out an online application form with details about yourself and what you want to use it for.
Who are Personal Loans for?
Personal loans are for people who want to borrow money for large purchases, emergency expenses, travel, weddings, debt consolidation and many others. Personal loans are unsecured, which means that you don’t need to use your car or house as collateral.
You can borrow up to 6x your monthly salary with this type of loan and have a fixed interest rate and term (the period over which you repay your debt). Repayments will be made monthly.
What happens if I don’t pay back my Personal Loan?
The financial institution that provided you with the personal loan has the right to pursue legal action against you if you fail to repay it.
Your credit score will suffer as a result of this, and it’s possible that other lenders won’t extend further credit to you in the future.
The differences between a renovation loan and a personal loan are many, but there are also many similarities.
The differences between a renovation loan and a personal loan are many, but there are also many similarities. Both loans have an interest rate that you need to pay back with your monthly payment.
A renovation loan is more flexible than a personal loan because you can use it for any purpose related to your home or property; whereas, with a personal loan the amount of money you borrow must be used for specific purposes like paying off credit cards or buying new furniture for your home office space at work.
A major difference between these two types of financing options is that with one-off payments (renovation), there is no set repayment period whereas instalment payments (personal) allow borrowers greater flexibility over time by allowing them to make smaller payments over time instead of having one large lump sum due all at once when they take out their initial mortgage from their bank.
The Bottom Line
We hope that at the end of this article, you will have a better understanding of the key distinctions between personal loans and renovation loans available in Singapore.
As was noted previously, both instalment and personal loans come with their own unique set of benefits and drawbacks.
Because of this, it is essential that you consider all of these factors in light of your own requirements before settling on the kind of loan that will serve you best in the given circumstances.
Read Also: Renovation Loan Vs Personal Loan in Singapore – Which One Should You Get for Home Improvements?