Need Advice: To Apply A Renovation Loan Or To Use Savings?

[dolphinz 0]

Hi, everyone!

What is the average renovation costs of a new standard 5-room flat these days?

Well, I have about S$50 K savings but am considering to keep for rainy days instead of using up for my renovations, what do you think?

I've checked on the RHB Reno Loan here: http://www.rhbbank.com.sg/personal/loans/RL%20rate.pdf

For S$30,000 @5.38% p.a., I just need to pay $571 over 5years...that's more affordable rather than to part with my S$50K emergency savings, don't you think so?

What's Furnishing Loan?

Please feel free to share

[May_dream1 14]

Hi, everyone!

What is the average renovation costs of a new standard 5-room flat these days?

Well, I have about S$50 K savings but am considering to keep for rainy days instead of using up for my renovations, what do you think?

I've checked on the RHB Reno Loan here: http://www.rhbbank.com.sg/personal/loans/RL%20rate.pdf

For S$30,000 @5.38% p.a., I just need to pay $571 over 5years...that's more affordable rather than to part with my S$50K emergency savings, don't you think so?

What's Furnishing Loan?

Please feel free to share

$571 per month for 5 years would be $34260 in total. so you are paying $4260 in interest

Edited July 13, 2012 by May_dream1

[taichipanda 3]

Hi, everyone!

What is the average renovation costs of a new standard 5-room flat these days?

Well, I have about S$50 K savings but am considering to keep for rainy days instead of using up for my renovations, what do you think?

I've checked on the RHB Reno Loan here: http://www.rhbbank.com.sg/personal/loans/RL%20rate.pdf

For S$30,000 @5.38% p.a., I just need to pay $571 over 5years...that's more affordable rather than to part with my S$50K emergency savings, don't you think so?

What's Furnishing Loan?

Please feel free to share

I will pay $50K for reno if i have $100K in saving; otherwise i'll take a loan and pay by installments.

[emerald28 0]

I will pay $50K for reno if i have $100K in saving; otherwise i'll take a loan and pay by installments.

i will also take a loan and pay by instalments

[Batman 0]

Just bear in mind that the interest are pre-calculated. i.e even if u repay in full (say kanna toto or 4D), there is no rebate of interest.

[crystalhuang 0]

a

Edited August 7, 2012 by crystalhuang

[bepgof 20]

Hi, everyone!

What is the average renovation costs of a new standard 5-room flat these days?

Well, I have about S$50 K savings but am considering to keep for rainy days instead of using up for my renovations, what do you think?

I've checked on the RHB Reno Loan here: http://www.rhbbank.com.sg/personal/loans/RL%20rate.pdf

For S$30,000 @5.38% p.a., I just need to pay $571 over 5years...that's more affordable rather than to part with my S$50K emergency savings, don't you think so?

What's Furnishing Loan?

Please feel free to share

No such thing as "average" reno cost - the variances are simply too wide, different ppls having different appetite, unless u narrow down some parameters further aact to gender, demographic, age range, income range, district, age of property, psf, discount factors for value of money over the years... wow so many.

Pls read note 5-"illustrative purpose only", meaning agar agar, not accurate. Why bank doesn't want to provide "actual" because the "actual" is too urgly, the "rubber" phrase - "illustrative purpose" "allows" bank to publish much lower figures and make it big big to attract client, then come with a small small footnotes...... Let me work out the "actual" figure for you.

Effective interest rate is the "yearly" compunded rate. "Nominal rate" can be 3-monthly,6-monthly, or daily compounded! Nominal rate also express as % pa which is very super misleading in finance!

Based on 5.74% effective rate, 5 yr, flat rate package (same as car loan calculation), $30,000. Monthly instalment is $643.5 (NOT $571)for 60 instalments!Total interest payable is $8,610 spread over 5 years. Don't forget money has future value.

The monthly rest package is very similar to mortgage loan payment calculation, in short called PMT, based on 5yr, $30,000, efr=5.74%, monthly payment is $576.36.

In corporate finance, there is a topic call "cost of capital structures" - meaning to find out the COSTS of raise $ via share issuing, or to borrow from banks, or through debt issue....For personal finance management, i teach u a concept, call "cost of borrowing/lending"

Remember 1. Paying $8610 over 5yr = paying $1722/yrly=$143.5 mnthly.

Remember 2. If put $30k into bank to earn, say 2% efr, $600/yrly, $50/mnthly

So, if u take up the loan and put yr $ into bank:

You will be paying interest difference of 143.5-50=$93.5/monthly for NOTHING for 60 months.

Use that $30K u have! Apply golder rule of - "bite the bullet and tighten the belt" and save save save - I'm sure nothing will go wrong - a good choice in life!. Notion play hard and party hard - bad taste in life - expect someone to take care of you later on?

Edited August 7, 2012 by bepgof

[dolphinz 0]

No such thing as "average" reno cost - the variances are simply too wide, different ppls having different appetite, unless u narrow down some parameters further aact to gender, demographic, age range, income range, district, age of property, psf, discount factors for value of money over the years... wow so many.

Pls read note 5-"illustrative purpose only", meaning agar agar, not accurate. Why bank doesn't want to provide "actual" because the "actual" is too urgly, the "rubber" phrase - "illustrative purpose" "allows" bank to publish much lower figures and make it big big to attract client, then come with a small small footnotes...... Let me work out the "actual" figure for you.

Effective interest rate is the "yearly" compunded rate. "Nominal rate" can be 3-monthly,6-monthly, or daily compounded! Nominal rate also express as % pa which is very super misleading in finance!

Based on 5.74% effective rate, 5 yr, flat rate package (same as car loan calculation), $30,000. Monthly instalment is $643.5 (NOT $571)for 60 instalments!Total interest payable is $8,610 spread over 5 years. Don't forget money has future value.

The monthly rest package is very similar to mortgage loan payment calculation, in short called PMT, based on 5yr, $30,000, efr=5.74%, monthly payment is $576.36.

In corporate finance, there is a topic call "cost of capital structures" - meaning to find out the COSTS of raise $ via share issuing, or to borrow from banks, or through debt issue....For personal finance management, i teach u a concept, call "cost of borrowing/lending"

Remember 1. Paying $8610 over 5yr = paying $1722/yrly=$143.5 mnthly.

Remember 2. If put $30k into bank to earn, say 2% efr, $600/yrly, $50/mnthly

So, if u take up the loan and put yr $ into bank:

You will be paying interest difference of 143.5-50=$93.5/monthly for NOTHING for 60 months.

Use that $30K u have! Apply golder rule of - "bite the bullet and tighten the belt" and save save save - I'm sure nothing will go wrong - a good choice in life!. Notion play hard and party hard - bad taste in life - expect someone to take care of you later on?

[dolphinz 0]

Hey, bepgof,

I find this strange...Maybank Jolene quoted $30,000 @2.98% with monthly installments $575 in the earlier reply, isnt't that correct?

Why did you use 5.74% instead of 2.98%? is that correct?

puzzled...

[bepgof 20]

Hey, bepgof,

I find this strange...Maybank Jolene quoted $30,000 @2.98% with monthly installments $575 in the earlier reply, isnt't that correct?

Why did you use 5.74% instead of 2.98%? is that correct?

puzzled...

Felt my effort wasted liao.

5.74% is for RHB bank, not Maybank.

Maybank's 2.98% is the "norminal rate p.a"- they NEVER mention the compounding interval(show front of restaurant, must go to kitchen and take a look!)The effective interest rate is 6.24%.http://info.maybank2u.com.sg/site_functions/rates_lending.aspx#renovation

Flat computation, 6.24% eff p.a, $30k, 5yr. Monthly payment is $656.00. Notice they use the phrase "in advance"?

Don't believe? Ask her again to put down black & white, make sure no "fine-print" or hidden clauses here & there.

Edited August 8, 2012 by bepgof

[bepgof 20]

Abt 4 yrs ago at car agency buying car, salesman was amazed with my "home work".

He kept pressing calculator, I simply took out a sht with all the possible combination of loan amount vs int rate vs monthly payment.

He was shocked.

[MnD 0]

You may consider balance transfer.. more work in terms of rolling over.. but better rates. currently scb is offer 0% for 6 months @ 1% processing, this will encourage you to pay back fast and in the event you can't do so by the end of 6 months, you can take a balance transfer from another bank to roll over. $10,000 flat $100 just need to make min sum for the first 5 months and pay in full on the last month. effective int rate 2.2%. uob offering 2.76% for 6 months no processing fees. =)

[Awin 0]

No such thing as "average" reno cost - the variances are simply too wide, different ppls having different appetite, unless u narrow down some parameters further aact to gender, demographic, age range, income range, district, age of property, psf, discount factors for value of money over the years... wow so many.

Pls read note 5-"illustrative purpose only", meaning agar agar, not accurate. Why bank doesn't want to provide "actual" because the "actual" is too urgly, the "rubber" phrase - "illustrative purpose" "allows" bank to publish much lower figures and make it big big to attract client, then come with a small small footnotes...... Let me work out the "actual" figure for you.

Effective interest rate is the "yearly" compunded rate. "Nominal rate" can be 3-monthly,6-monthly, or daily compounded! Nominal rate also express as % pa which is very super misleading in finance!

Based on 5.74% effective rate, 5 yr, flat rate package (same as car loan calculation), $30,000. Monthly instalment is $643.5 (NOT $571)for 60 instalments!Total interest payable is $8,610 spread over 5 years. Don't forget money has future value.

The monthly rest package is very similar to mortgage loan payment calculation, in short called PMT, based on 5yr, $30,000, efr=5.74%, monthly payment is $576.36.

In corporate finance, there is a topic call "cost of capital structures" - meaning to find out the COSTS of raise $ via share issuing, or to borrow from banks, or through debt issue....For personal finance management, i teach u a concept, call "cost of borrowing/lending"

Remember 1. Paying $8610 over 5yr = paying $1722/yrly=$143.5 mnthly.

Remember 2. If put $30k into bank to earn, say 2% efr, $600/yrly, $50/mnthly

So, if u take up the loan and put yr $ into bank:

You will be paying interest difference of 143.5-50=$93.5/monthly for NOTHING for 60 months.

Use that $30K u have! Apply golder rule of - "bite the bullet and tighten the belt" and save save save - I'm sure nothing will go wrong - a good choice in life!. Notion play hard and party hard - bad taste in life - expect someone to take care of you later on?

What do you suggest then ? So it is not advisable to take a big loan and save on minimal reno?

[Awin 0]

No such thing as "average" reno cost - the variances are simply too wide, different ppls having different appetite, unless u narrow down some parameters further aact to gender, demographic, age range, income range, district, age of property, psf, discount factors for value of money over the years... wow so many.

Pls read note 5-"illustrative purpose only", meaning agar agar, not accurate. Why bank doesn't want to provide "actual" because the "actual" is too urgly, the "rubber" phrase - "illustrative purpose" "allows" bank to publish much lower figures and make it big big to attract client, then come with a small small footnotes...... Let me work out the "actual" figure for you.

Effective interest rate is the "yearly" compunded rate. "Nominal rate" can be 3-monthly,6-monthly, or daily compounded! Nominal rate also express as % pa which is very super misleading in finance!

Based on 5.74% effective rate, 5 yr, flat rate package (same as car loan calculation), $30,000. Monthly instalment is $643.5 (NOT $571)for 60 instalments!Total interest payable is $8,610 spread over 5 years. Don't forget money has future value.

The monthly rest package is very similar to mortgage loan payment calculation, in short called PMT, based on 5yr, $30,000, efr=5.74%, monthly payment is $576.36.

In corporate finance, there is a topic call "cost of capital structures" - meaning to find out the COSTS of raise $ via share issuing, or to borrow from banks, or through debt issue....For personal finance management, i teach u a concept, call "cost of borrowing/lending"

Remember 1. Paying $8610 over 5yr = paying $1722/yrly=$143.5 mnthly.

Remember 2. If put $30k into bank to earn, say 2% efr, $600/yrly, $50/mnthly

So, if u take up the loan and put yr $ into bank:

You will be paying interest difference of 143.5-50=$93.5/monthly for NOTHING for 60 months.

Use that $30K u have! Apply golder rule of - "bite the bullet and tighten the belt" and save save save - I'm sure nothing will go wrong - a good choice in life!. Notion play hard and party hard - bad taste in life - expect someone to take care of you later on?

What do you suggest then ? So it is not advisable to take a big loan and save on minimal reno?

[bepgof 20]

What do you suggest then ? So it is not advisable to take a big loan and save on minimal reno?

Each has different appetite for risk, life-style choice, etc. These result in different patterns on spending.

Good concept on investment is putting $ into those assets that appreciate in value over time, like property, stock, gold, bonds, etc. Those assets that depreciate in value over time - try minimise it. Own them based on "needs", not "wants". Example, car, keeping pets,...

Financial leverage( debt vs earning power), assets allocation concepts are important too.

- once start work, save for that 20% downpayment for property, reno, get wed with the loved one as 1st phase.

- Kid, car, insurance, etc come 2nd phase.

- Save for kid's future education fee, learn & look for investment opportunities (stock, part-time job, property.

- upgrade self earning capacity....

- Old age, poor health, leave whatever u've earned to your "loved ones" and return your body to dust.

- All these, a chasing after wind under the sun.

Some contended to

- "enjoy first", pay later mentality

- "no kid, keeping pet" policy

- remain single and enjoy "one night stand" till a day can't stand.

- Work like cow and no enjoyment

So, I can't suggest u anything, can only "explain" to u. Simply decision is on your hand. However, bear this truth in mind:

Sow a thought and you reap an action

Sow an act and you reap a habit

Sow a habit and you reap a character

Sow a character and you reap a destiny