If you are buying a new flat, it is essential to set aside an additional S$50,000 to S$80,000 to renovate it according to your tastes. Those who have lived in the same house for a period of 10 years or more would need to spend a substantial sum to refurbish their homes.

But, wow will you pay for this expense? If you have recently bought a home, you would have probably taken on a large home loan, and it could be a meaningful burden to incur further debt for your renovation.

Therefore, people who are remodelling an existing home should also try and avoid taking a loan for this purpose. Instead, they should plan ahead and set aside money on a regular basis. However, at times, the only way to arrange the required funds is through a renovation loan.

Several banks offer this product specifically for people who need help funding their home renovations, and often even give you a discount if you already have a home loan from them.

Here are some other points to keep in mind so that you can be sure to get a great renovation without stretching your finances too much.

Decide on your budget

How much are you going to spend on your renovation project? You may have a figure, say S$60,000, in mind. But when you add up the expenditure on the various items, it is likely that your total will exceed this figure. In fact, if you have a budget of S$60,000, the total of the individual expenses should be in the range of S$45,000 to S$50,000.

Why should you keep such a large buffer? As the renovation progresses, you will probably think of additional improvements. Not only that, home renovations almost always encounter complications and delays that prolong the construction and increase the overall cost of the project. Unless you keep a cushion in your initial estimate, you can go hopelessly over-budget.

How will you find the right interior designer and contractor?

There are differing opinions on whether you should engage an interior designer at all. Most homeowners have a very clear idea about what they require, and there is a wealth of information available in magazines and on the internet on various designs and themes. You can clip out photographs of room layouts and designs that appeal to you and simply ask your contractor to replicate what is in the photograph or the image that you have downloaded.

But, there also are strong arguments in favour of hiring the services of an interior designer. When you are spending such a large amount on your renovation, it may be worth incurring an additional expense of S$3,000 to S$5,000 for professional advice so that you don’t end up with a home that isn’t all that great. In fact, an interior designer may be able to make suggestions and offer guidance that could save you thousands of dollars.

The best way to find a good contractor and an interior designer is by asking friends for references. You should try and identify someone who has recently got renovation work done, and avoid referrals where the person giving the recommendation does not have any direct knowledge about the quality of the work of the contractor.

Come up with your own ideas

If you do decide to use the services of an interior designer, you should not delegate the entire responsibility for your home to this person. You are the one who is going to live there and are in the best position to decide what your house should look like.

Of course, this does not mean that you shut your mind to the ideas that the interior designer or even the contractor provide. These individuals are professionals who would have worked on dozens of similar projects in the past. Their expertise can be crucial to a successful home renovation project.

A good practice to adopt is to make a list of your ideas and queries and then discuss them in detail with your designer or contractor. Listen carefully to what they say and be prepared to change your views if their proposals seem superior to yours. After all, they are specialists in this field and you are paying for their know-how.

Some precautions that you should take

When your contractor starts the home renovation work, it is important to supervise the progress on a regular basis. The contractor could say that it is sufficient for you to visit on a weekly basis, but it is advisable to monitor the work daily. Seeing the progress that has taken place every day for yourself has several advantages. If the contractor has misunderstood your instructions, it is critical to spot the mistake as early as possible. Quick rectification will be easier and reduce potential costs significantly.

For instance, the Consumer Association of Singapore receives a number of complaints against contractors every year. According to the data on the association’s website, 11% of the complaints received in 2016 pertained to contractors.

YearNumber of complaints filed against contractors
20131,779
20141,462
20151,447
2016 (reported on 15 December)1,268

Source – the Straits Times

The best precaution that you can take to prevent becoming one of these people filings complaints is to make a daily visit to your home to verify that work is progressing according to schedule. Not only that, your payments should be linked to the amount of work that has been completed. Don’t make the mistake of paying 100% of the agreed amount in advance.

Do you need permission to make alterations in your house?

In Singapore, it is the home owner’s responsibility to obtain permission from the Urban Redevelopment Authority for certain types of renovation. As a general rule, you will need permission for:

  • Changes that affect the external facade of the building.
  • Alterations that result in an increase of the floor area.

For HDB flats, The Housing & Development Board has another specific set of rules for renovations. For instance, you can only use an HDB registered renovation contractor and you are required to receive prior permissions from HDB for various types of work.

Plan your renovation carefully

It is advisable to carry out extensive research before starting on your renovation exercise. Spend time on finalising what you want your house to look like when the refurbishment is over. This will help you guide the work of the interior designer and the contractor.

Also, you should always keep in mind that, while your budget is important, it is not the only factor that you should consider. The efficiency and skill of the contractor that you engage will play a large role in the project’s success. Be prepared for delays and your initial budget estimate being exceeded.

If done correctly, renovating your home is one of the most fulfilling and worthwhile projects you could spend your money on. Not only will you get a new home that is a pleasure to live in and which looks exactly like you had imagined, it could sometimes even help raise the value of your property in case you decide to sell or sent it out.

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ValuePenguin is personal finance company based in New York. DJ is responsible for building ValuePenguin’s presence in Asia, from researching personal finance topics in the region to building relationships with financial and media institutions. He previously worked as an investment analyst at leading hedge funds in New York including Cadian Capital and Tiger Asia. His expertise is in the global technology, consumer and financial industries. He graduated from Yale University with a degree in Economics, and speaks Korean, English and Mandarin Chinese.

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