So you’ve already used up the whole renovation Loan, and the house is still not done. Now what? Well apart from sending angry emails to the Interior Designer, here are some concrete steps you can take. These will save you having to live in a half-completed house, from lack of money:
1. Prioritise the work that can be done
Some parts of the house will have to be left incomplete, if the cash has run out. In this situation, speak to the Contractor about prioritising the work. Try to at least finish the essential living spaces.
Don’t make the living room a priority; it’s non-essential, and often the most expensive room. Instead, have the contractor work in the following order:
- Master bedroom
- Other bedrooms
- All other rooms, such as studies and dining rooms
Tell the contractor to leave out aesthetic work (i.e. decorations, such as wallpapering). Focus on functionality.
2. If you’re intending to rent out the place, consider renting it out unfurnished and partially complete
Once the bare essentials are in place (the property is liveable), you can rent it out as an unfurnished / partially finished unit. Leave it to your tenant to buy whatever tables, chairs, desks, etc. they need. You can then continue renovation works as rent money comes in, if your tenants don’t mind.
The downside is that you’ll probably have to offer a big discount, so your rental income may not be as high as you expect; but it sure beats having a vacant property.
As another upside, tenants who are staying for a whole (e.g. a family staying for a few years) are more likely to renew their lease with you, if they’ve bought all or most of the furnishings.
You can also buy over the furnishings from the tenant for cheap, if they intend to leave. They could save you a fair amount of money, as they’ll be eager to sell it all off quickly.
3. Consider leaving the kitchen incomplete for a few months
The kitchen is probably the most expensive room next to the living room. The good news is, you can probably survive without one for quite a while.
Consider setting up a pantry spot (which need not be in the kitchen), as a makeshift measure. This is just a corner with a kettle, mini-fridge, microwave, and convection cooker. This is enough to make simple or instant foods.
(Or there’s always relying on food delivery, and eating out at the hawker centre).
Save up for a few months, and you can complete the kitchen later in the year. While it’s not ideal over a long period, it might be better than taking up another loan. Which leads us to point out that you can…
4. Use a low-interest personal instalment loan, if it would make up the difference
Search on SingSaver.com for the cheapest Personal Instalment Loan. The rates can be as low as 4.55 per cent per annum.
If you’re only short by a small amount, such as S$5,000 to S$10,000, you can also consider looking for a zero-interest loan. These loans typically charge you no interest for around six months; if you can pay it all back by then, it’s better than taking a regular loan. The availability of these loans varies based on the time of year, so check back often to find such deals.
Don’t use a credit card to continue renovations, as the interest rate is too high.
5. Approach the subcontractors discreetly
Your General Contractor (GC) hires subcontractors, such as electricians and plumbers, to complete the renovations. Sometimes though, it pays to bypass them and discreetly speak to the subcontractors.
You may find that the plumber is willing to complete work in your toilet or kitchen, for a reasonable sum paid directly to them (as opposed to going through your contractor). You may find that, with the contractor out of the picture, some costs can fall dramatically.
However, be careful to only work with subcontractors who have proper insurance (if they do any damage, it has to be claimed from their business insurance. Your home insurance will not pay out for it).
6. Talk to your bank about extending the renovation loan
Speak to your bank about the issues, and see if they’re willing to stretch your renovation loan limit.
Some banks are willing to do this, if you’ve already been repaying the renovation loan as work progressed. Alternatively, they may just require you to find a guarantor – if you can find one, they might be willing to disburse a much bigger loan.
7. Speak to another contractor, about finishing the project
If your contractor is demanding a price that’s too high to finish the project, then look elsewhere. Sometimes, another up-and-coming contractor may be willing to finish up the work of the previous one, at a cost that’s acceptable to you.
Emphasise that, at this point, you don’t need a masterpiece – you just need a reasonable stopgap, until you can afford to pay for full completion of the works.
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.
The post What to do if You Run Out of Money During Renovations appeared first on Financial News and Advice in Singapore.