Loans are an important aspect of financial services as they help individuals overcome cashflow shortfalls for various purposes
Be it for education, business needs, household expenditure, or simply an expensive purchase, loans are an important aspect of financial services as they help individuals overcome cashflow shortfalls for various purposes.
The most common form is the personal loan, a helpful tool to tide over emergencies, cashflow shortfalls or address temporary financial troubles.
A personal loan can also be used to fund expensive purchases that can be amortized over smaller monthly payments. Financial institutions such as banks provide personal loans based on borrowers’ credibility. Personal loans are often preferred because they can be used for a variety of purposes.
Home renovation is one common example of what a loan is used for. Of course, there is also a possible scenario wherein a home requires urgent repairs or where certain elements are posing a safety threat. This could take the form of electrical or plumbing requirements – repairs that need immediate attention.
Alternatively, you may simply be contemplating long-desired changes to your home just to break the monotony and refresh your space. The reasons can be endless – you may possibly just be bored of looking at the same dull light fixtures, perhaps wish to install better sound insulation to complement the high-end stereo system for movie nights, or just change things around.
Getting this kind of work done can be expensive. At times, it may not be possible to have the required cash upfront to pay for renovations at your home, or you would rather incur the cost over a period of time instead of making a singular dent in your savings. That is why there are various funding options available, including a personal loan and a renovation loan. In deciding which loan to pick, it is important to first explore which one will best suit your requirements.
When looking at personal loan options, one must narrow down on the lender carefully. Should one fail to do so and make a less than optimal choice, it can mean paying more in interest costs or hidden costs over the loan duration, which is never ideal.
Using renovation loans
A renovation loan, as the name suggests, is a loan facility availed solely for the purpose of refreshing one’s home, be it for new furniture or fixtures, fresh lighting, a major remodelling or perhaps even extensive repairs. All of this costs money – and sometimes, a lot of it!
After you envision what changes you’d like to see in your home and determine how much it will cost you, comes the next step of determining how to pay for these expenses. Given renovation can result in large expenditure, one option is to borrow money from a financial institution and pay in instalments and/ or at a more convenient time, instead of bearing the burden at one go. Even if one is not financially constrained, borrowing money to pay for large expenditures such as for renovation could be a financially more feasible option.
One option is a renovation loan to fund your home makeover project. Rather than tapping into your savings, opting for a renovation loan can allow you the comfort of not having to worry about cashflow, but still accomplish the desired makeover for your home.
What about personal loans?
A renovation loan is not the only funding avenue available in the market. In fact, other options may suit your needs better. Renovation loans can only be used for the intended purpose and the capital borrowed cannot be diverted towards any other area of spend. One key requirement that must be complied with is that the renovation loan applicant must either furnish proof of owning the home or being a family member of the homeowner of the home that he or she wishes to renovate.
In such a context, a personal loan allows the borrower more flexibility. This is one if its biggest advantages over renovation loans. When one takes a personal loan, the sanctioned funds can be used at the borrower’s discretion, including for the renovation of a home.
As with any loan, the applicant must meet the bank’s eligibility criteria. This is why it is important for anyone facing cashflow shortfalls to speak to a loan consultant. A loan consultant will be able to help you analyse what loans are out there by the different lenders and get you a loan which meets your unique borrowing needs.