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All About the Money: Tips on How to Get a Home Improvement Loan

Jun 17, 2022

All About the Money: Tips on How to Get a Home Improvement Loan

Tips on How to Get a Home Improvement Loan

Two factors limit your vision of a new look for your home: your imagination and your budget. Envisaging a refreshing aesthetic for your room may be priceless, but planning your spending in turning it into reality comes with a hefty price tag. 

Homeowners would conjure up various ways to attain such a high-priced budget: setting up a home sale, running a small business, collecting savings in a jar, etc. But, if you want things to happen swiftly, you could try to apply for a home improvement loan. 

To an extent, going through the bureaucracy is daunting and often confusing. For this article, we will guide you through the steps of getting that cash to fund that dream home project!


Thinking Ahead

When we envision a new look for your home, we can get carried away with our ambitions to the point that we forget to ground ourselves in reality. With aspirations, there is a practicality to balance it out. At what point does your vision become difficult or unrealistic to concretize? 

Hence, you must plan the budget first before drawing out your plans and borrowing money for funds. Start by thinking of the materials and tools you will need for your project. 

Do you need to replace the old tiles with new ones? 

Consider this. A typical Onyx 60cm X 60cm porcelain tile is PHP 350 per piece. That is a 0.36 square meter tile. If your room has an area of about 60 square meters, you will need over 167 pieces of tiles which will cost you around PHP 58,000, not including extra tiles that you might need when you have to replace a broken tile or cut off a fraction of the tile to install on a small corner of the room.

Do you plan to install new appliances, storage closets, or other items? 

A built-in closet for your clothing, such as this KREATIV Gene Built-in Closet Solid Oak, would cost PHP 32,995 undiscounted, while a shoe rack, such as the KREATIV Grin Shoe Cabinet has an original, non-sale price tag of ₱16,995.

Is your project a simple renovation or a complete remodeling of a room?

These are just a few questions you must ask yourself before attaining the needed funds for a home project, regardless of size and extravagance. 


Finding the Right Place

With a budget planned out, it’s time to find a place to get a home improvement loan.

Here in the Philippines, there are two sources to apply for a home improvement loan: privately-owned banks such as Security Bank & Citibank and government entities such as PAG-IBIG Fund. In either case, one must carefully read through the details of their respective programs, particularly the following: interest rates, loan terms, and qualifications.

Over time, you must pay back what you owe to the company. Paying it back becomes harder when an interest rate is too high for any lender to keep up. To avoid being indebted, choose one with a low and manageable interest rate.

Most entities would offer a set amount of money for you to loan, while others let you dictate what amount you wish to borrow. In either case, there are criteria to consider that determine whether you are a suitable candidate for the loan. 

Ask yourselves the following questions. Do you have a sustainable level of income that will let you pay your debt in the long term? Can you guarantee that the loan you are applying for is not too burdensome for you to pay back? If you are unsure,  check first your average income, which you can find out in your paycheck. With the planned loan amount, factor in the following: 

  • How much you can pay for the debt per month or annum within the given period of payment;
  • The interest rate of the loan plan and;
  • The part of your income you will reserve to pay that debt. 

Let us use an example to demonstrate this. For instance, you have a monthly income of PHP 40,000. You plan to borrow over PHP 300,000 to renovate your bedroom and have five years to pay with an interest rate of 6.25% per year. Do you think you can pay the debt, given these factors? Leave your thoughts below.

In addition, when you have a co-maker such as a spouse or family relative, you can avail or apply for a higher loan under both of your names.

With all these steps considered, what do you take away from this entire procedure? In some capacity, it is about being pragmatic and grounded. Making improvements to your home is a luxury not everyone can afford, and transforming it is a task not to be taken lightly. Here, you will learn what you can or cannot achieve, but, at the same time, you could also learn to be proud of the smallest or biggest of efforts.

If you happen to stumble upon this article and are also looking for ideas for your home, we would like to welcome you to AllHome, your one-stop place for your home-related needs. Shop at your nearest AllHome branch or visit www.allhome.com.ph to purchase items online.

Furthermore, we also offer exciting promos, eye-catching recommendations, and more DIY tips on Facebook, Instagram, and YouTube, so stay updated by following or subscribing to these official social media pages!

Thanks for reading, and we’ll see each other again in our next entry!

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