My personal advice on renovation loan

The first thing that comes to people’s mind about renovation loan is low interest rate. That is really normal as it concern how much one will pay. RHB and Maybank are 2 of the most competitive in the market. I just don’t understand how can our own local banks be charging at a higher rate than foreign banks. The banks whether local or foreign always display interest rate figures that are really misleading. How can most financial idiots (that include me) understand? Can’t they just make things simpler? Bankers…. please do something about that! Therefore, the simplest way to know which loan is the cheapest is to manually calculate how much in total you will be paying. Example: (monthly installment amount) x (total number of months) + administration fee

What is it talking about?????

The second thing is to take note of the way your ID will be paid. There are 2 choices of payment to your ID. First is one time full payment, meaning paying your ID the full amount of the loan even before your renovation even started or completed. This is a very disadvantage way to you as a home owner. When the money is already in your ID’s hand, there is less bargaining chips in your hand. If there is something wrong with the renovation or the work is not done as promised, there is basically nothing much you can do. He can even tell you it cannot be done and you will be knocking your head against the wall! This will usually happens when the banker in-charge of the loan is recommended by the ID. Second method of paying is separating the total amount into a few cheques and you can pay the ID based on the stages of the renovation. Example, $25,000 loan into 3 different cheques, $10,000, $10,000, and $5000. In this way, the ID will be kept on their toes and you have control over the renovation. If in any case there is a dispute and you want to change ID, your lost is minimum. Therefore, do check with the banker about the way the loan is paid before you sign on the doted line!

Blog about Interior Design, renovation and home improvement.


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