More cash, less stress.
So, you recognise the importance of investing in renovation and quality furnishings that last. But between your housing down payment, wedding and the lot, there’s also a need to set aside cash for day-to-day expenses and rainy days.
While renovation loans can certainly help, they’re usually capped at $30,000 – a figure that’s far from the average renovation cost in 2023. How then can you make up for the shortfall? What if you need a little aid in financing but don’t wish to incur interest rates that come with renovation loans? Or quick loan approvals to put down a deposit for contractors to start work ASAP?
Here are two options that give you sufficient cash flow for your day-to-day: zero-interest Balance Transfers and Personal Loans.
Balance Transfers: for borrowing at 0% interest, over a short period of time
What is a Balance Transfer?
A Balance Transfer is a short-term loan with zero or low interest rates, as long as you’re able to pay it back within the agreed upon tenor (usually up to 12 months). Instead of interest, banks earn by charging you a one-time administrative fee, typically between 1 to 5% of the loaned amount.
In other words, Balance Transfers buy you more time to make payment with no/minimal interest. After all, we all need some margin in life.
And speaking of margin, Balance Transfers also offer flexibility that renovation loans do not. For instance, you can stick to the minimum monthly repayment amount and repay the balance owed at the end of the tenor, or choose to repay more than the minimum monthly amount as and when you have extra cash on hand.
When to use Balance Transfers for your renovation
Because of how they work, Balance Transfers are particularly beneficial if:
(1) You’re able to fund the majority (but not all) of your renovation in cash, and wish to avoid interest rates that come with renovation loans.
Here’s a hypothetical example:
- Your renovation costs $50,000
- You’re able to fork out $40,000 in cash
- You need some extra help with the balance of $10,000
In such a scenario, Balance Transfers are a savvy means to help you finance the remaining $10,000.
(2) You’re confident of repaying the loan amount within the tenor period.
Common scenarios include:
- Needing cash on hand for your wedding, knowing that the bulk of the cost will eventually be off-set by angbaos from your guests
- Paying of subcontractors and furniture businesses that require upfront payment rather than installments
(3) You incur unexpected renovation costs.
Fact: it’s pretty common for final renovation costs to exceed initial budgets by 10 to 20% due to unforeseen circumstances. For instance, termite infestations or water damage under a resale property’s existing flooring may only be uncovered when renovation works are in progress, and will incur extra costs to rectify.
UOB Balance Transfer
If any of the above resonate with you, then a UOB Balance Transfer might just be what you need. With a minimum loan amount of $500, its key benefits* include:
- Instant cash at 0% (EIR from 4.69% p.a).
- Flexible repayments from as low as $30 a month
- 3-, 6- or 12-month tenors
- One-time processing fee from as low as 1.49%
- 0.5% cash rebate for loans above $10,000 (limited time offer; T&Cs here)
*Terms and conditions apply.
Find out More/Apply Now
Important note: interest rates will kick in if you fail to repay the loan on time, and these can get pretty high. If you’re not confident of repaying the loan amount within a year, it’s better to take up a Personal Loan instead (more on that next).
Personal Loans: for longer term financing with fixed interest rates
Apart from a $30,000 cap, did you know that renovation loans cannot be used for some furnishings/aspects of your renovation (e.g. smart home devices, curtains and blinds)?
Personal Loans, on the other hand, don’t have such limitations, allowing you to use them for items that can’t be covered by your renovation loan.
When to use Personal Loans for your renovation
Unlike Balance Transfers, Personal Loans have fixed monthly repayments over a longer period (usually between 12 to 60 months).
This in turn makes Personal Loans good for:
- Larger loan amounts and/or if you’d prefer a longer repayment period
- Those with assets stuck in investments or fixed deposits
- Those who prefer fixed monthly repayments
UOB Personal Loan
If that’s you, consider applying for a UOB Personal Loan that come with the following benefits*:
- Instant approval with no processing fees
- Tenor of up to 60 months
- Low rates from 2.88% p.a. (EIR 5.43% p.a.)
*Terms and conditions apply.
Find out More/Apply Now
Should you apply for a Balance Transfer or Personal Loan?
In summary, here’s when you should go for either of the above to finance your renovation:
| Balance Transfer | Personal Loan |
| You’re confident of repaying the full amount within 12 months, and wish to avoid interest rates that come with other types of loans | If you require larger amounts and a longer repayment period (tenors between 12 to 60 months) with fixed monthly repayments |
Live within your means, but don’t forget to live life to the fullest!
Lastly, know that taking a loan is NOT a sign of defeat, nor does it suggest that you’re not living within your means.
In the same way that most people are unable to pay for their property in cash, Balance Transfers and Personal Loans are practical ways to build your dream home, while affording you cash on hand for comfortable day-to-day living and emergencies.
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