There are many things to consider when renovating your home, from deciding what you want to get done to choosing contractors and materials. One of the major aspects that will influence your final choices is the costs of home renovation in Malaysia and whether you can afford it.
By understanding your financing options for home renovation, you can make more informed decisions about budgeting for and achieving your dream home.
How to finance a home renovation in Malaysia without a loan
The cost of a home renovation in Malaysia can typically cost 10% of the value of your home or more. However, this amount can increase significantly if you are planning major renovations, especially if you arepurchasing a subsale house that needs a significant facelift or changes to the layout or design.
The three most common ways to finance these costs without applying for a loan are:
Cash in hand
Using savings to finance your home renovations is the most straightforward and affordable option, as you won’t need to KL pay any interest on the money spent. However, it can mean delays in saving up the amount you need and may not be viable if you want your renovations done sooner but you don’t have enough saved up.- Credit card
Acredit cardcan be a good option for smaller projects or for furnishing as most credit cards come with 0% instalment plans with selected merchants, which would allow you to ease your payments. However, if you are considering a credit card for unexpected expenses, it's worth keeping in mind that they have higher interest rates, so make sure you pay off outstanding balances by the due date to avoid attracting interest that can add to your overall cost of renovations. - Overdraft facility
Anoverdraft facility allows a bank customer to borrow money beyond their available balance in their current account. Overdraft facilities typically have lower interest rates than credit cards, ranging from 2% to 5% on top of Standardised Based Rates (SBR). However, there can also be significant overdraft fees which you should be aware of.
Cash in hand
Credit card
Overdraft facilityCan you get loans for home renovations?
The short answer is yes! Malaysians can get loans for home renovations. While personal loans are a common choice for home renovations, many are unaware that renovation loans are also available.
Personal loans are unsecured loans, which means they are not secured by collateral. For this reason, personal loans are typically for smaller amounts of money and you might not get enough to cover your renovation costs.
Renovation loans, on the other hand, are secured loans that can offer larger financing amounts to cover your renovation costs. Do remember that you will need to provide documentation as proof to the bank that the loan will be used for renovation purposes.
So, how do home renovation loans work compared to personal loans, credit cards, and overdraft facilities? Here’s a quick overview.
Renovation loan | Personal loan | Credit cards | Overdraft facility | |
|---|---|---|---|---|
Interest rate | Same as home loan | 11.53% - 14.68% effective rate per annum depending on the loan amount and tenure | 15% - 18% per annum | SBR + 2-5% |
Tenure | Up to 35 years (taken in tandem with home loan) or age 70, whichever is earlier. | 2 to 6 years | N/A | N/A |
Amount | Up to RM500,000 | Up to RM100,000 | Based on credit limit | Based on security limit |
Recommended for | Big renovation costs or renovations that will take place over a longer period of time. | Medium renovation costs or renovation costs where you have cash for part of the costs upfront. | Furniture, appliances and small renovation costs that can be easily paid off. | As an emergency reserve to dip into if your renovation costs go higher than expected. |
Who can apply for a renovation loan in Malaysia?
The eligibility criteria to apply for a renovation loan in Malaysia may vary from bank to bank, but some general common requirements include:
Which financing option should you choose?
The best financing option for your home renovation will depend on the final estimates on costs. If your home renovation cost is low, it might be better to consider using your savings, credit card, or overdraft facilities.
However, if your renovation cost is high, it might be best to consider a renovation loan with lower upfront costs, interest rates, and affordable monthly instalments. Somehome and renovation loans can also be bundled into one, single convenient package.
When choosing a financing option, be sure to carefully consider both your renovation goals and other associated expenses, such as ongoing home loan payments and furnishing costs. This will help you select the most suitable option for your needs—and dreams.
Not sure how to plan or finance your renovation? Use ourhome affordability calculator orplanner tool to help you get started.
💡 The information provided above is purely for educational purposes.
References
1. iMoney Malaysia. (2023). "Renovation Loan vs Personal Loan: Which is Better for You?" https://www.imoney.my/
2. Loanstreet Malaysia. (2023). "Renovation Loan Malaysia: Complete Guide." https://loanstreet.com.my/
3. CompareHero.my. (2023). "Personal Loans in Malaysia: Understanding Interest Rates." https://www.comparehero.my/
4. The Star Online. (2023). "How to Apply for a Renovation Loan in Malaysia." https://www.thestar.com.my/
5. RinggitPlus. (2023). "Overdraft Facility in Malaysia." https://ringgitplus.com/
