11 Tips To Keep Costs Low When Renovating a Resale Home.
Due to the current climate of Covid-19, buyers are choosing to purchase resale properties to move in quicker. While this eliminates the possibility of construction delays, renovations still need to take place. Contractors are suffering from the same labour and supply shortages that affect builders - and resale home renovation costs are on the rise. Read our top tips how you can try to keep costs under control.
Is the cost of renovations going up during Covid-19?
During this time, renovation costs typically increase by 10 to 20%. A shortage of labour is the main cause: many subcontractors are not local (most are Malaysians). Often, the choice is to postpone renovations for long periods or use more expensive local labour while Covid-19 rages.
As with materials, such as countertop materials and floor tiles, there is a wide range of options. Manufacturers have been forced to close factories or suspend operations due to pandemic issues; this has caused contractors to switch suppliers and raised costs.
As prices rise, the market could adjust. For carpentry or electrical work, for instance, it is rare that the price drops again after a certain benchmark is set. Therefore, even after Covid, the price increase could persist. Even if Covid-19 subsides, the backlog of demand could still take some time to clear up, as prices are always determined by demand and supply.
Here are 11 ways to lower your costs when renovating your resale flat.
1. Repair or DIY.
In some cases, the previous homeowner or tenant may have left behind furniture when selling a resale home. You can actually consider refurbishing the furniture instead of getting rid of it because the colours or condition look shabby (disposal of bulky furniture may be more expensive than you think).
In Singapore, you can, for example, get furniture refinishing services, such as sanding and polishing. For those who like the hands-on approach and are up to the task, you may even want to consider attempting to refurbish some pieces yourself. Almost anyone can do a very simple fix on a creative weekend via sanding (with low-grit and high-grit sandpaper) or painting!
Outside of that, below are some ideas to get your DIY juices flowing:
Wrapping stickers around existing cabinets in the kitchen, living room, bathroom and bedroom can save you money on hacking or fabrication of new cabinets
Using tile overlays for the bathroom will save you from hacking or redoing the waterproofing
Consider using a pebble/flake wash spray in bathrooms so you don't have to hack up the waterproofing
DIY furniture could also be an option for you. You can customize Ikea furniture by changing various items such as pegs, cabinets, and knobs and handles.
2. Reduce the amount of built-in furniture.
When it comes to renovations, built-in cabinetry is usually one of the most expensive parts. Obviously, this can be customised according to your needs, especially if you have a peculiarly shaped house, which requires a more personalized approach. With storage areas, this is especially true, as you can gain extra useful space by installing a few built-ins here and there. Bench seats, platforms in the living room and bedroom, and cabinets under the stairs are examples.
However, as with any made-to-order item, the cost will be higher (like an off-the-rack suit compared to a bespoke tailored suit). Therefore, depending on your budget, you have the option of buying built-in furniture for a few rooms, and loose furniture for the rest of the house. In the future, when your budget allows, you can replace the loose furniture for a more tailored look, especially if you aren't planning on staying for too long.
In addition to cost savings, loose furniture also provides a degree of flexibility. You can change up the look if you get tired of it after a few years. Alternately, you may want to move pieces around to give your living room a new look. If your storage needs grow over the years (unlike built-in furniture), you can get bigger pieces of storage furniture.
Last but not least, built-in furniture will also last for decades to come. Even if it looks modern today, that same look may look dated in the future - and this could harm your chances of selling your house in the future. In addition, loose furniture will not have that issue - just get rid of it and stage it all over again if necessary!
3. Contractors can be cheaper than Interior Designers.
Theoretically, Interior Designers should charge more. Designers are supposed to create the plans, while contractors are only responsible for implementing them. A designer is responsible for all the 3D projections, sketches, suggestions on fittings and furnishings, etc. This adds to the cost.
As such, you might be able to lower costs by going straight to the contractor, and explaining what you need. However, this requires you to have a detailed idea of what you want, as it’s not the contractor’s job to conceptualise.
4. Make changes to the materials.
Materials are naturally one of the most expensive parts of any home renovation project. Several factors (labour shortages, delayed shipping, etc) have caused lumber, steel, and copper prices to rise, so if you are on a tighter budget, you might want to consider switching out to other more affordable materials.
An engineered stone countertop would be a more affordable alternative to granite, and laminate flooring would be a more reasonable alternative to hardwood. You may want to be selective about which materials you do change up, depending on your budget. You could still save on the bedroom flooring if you cook a lot and want a statement piece in the kitchen. Granite is one of the most heat-resistant materials.
Alternatively, we can think about big impact changes - that is, the ones that capture our attention first. It may make more sense to splurge on the feature wall in the living room while keeping the majority of its old look in the bathroom. Keep in mind that although saving on costs is important, it's equally important to think long term and to invest in materials that can save you further maintenance headaches down the road.
5. Determine whether the contractor has experts on staff.
Subcontractors are not used by every contractor or Interior Design firm. Companies employ their own carpenters, electricians, and other professionals. Consequently, labour shortages may not be as severe in these companies.
Many companies in Singapore have their own workshops for manufacturing a variety of products, from custom furniture to floorboards. It may be easier for them to maintain prices (or at least give you a firmer timeline) since they are less reliant on imported materials. When renting a home as a stop-gap measure, moving in earlier could save you some money, even if construction costs are high.
There is no guarantee, however. Contractors and designers might raise their prices anyway, even if they are unaffected (because everyone is). As well as having staff and facilities in-house, more established firms may charge higher prices, even if they didn't raise prices. Even so, finding out wouldn't hurt!
6. Use renovation loans before other types of loans.
Don't start with a personal loan if you have to borrow money for renovations. In case you exceed the renovation loan amount, you should use other loans instead.
The maximum loan amount for renovations is $30,000 from all banks, or six months of your income, whichever amount is lower. If your renovation costs $50,000 and you use loans, the first $30,000 should come from the renovation loan, and the remaining $20,000 can come from whatever the cheapest options are. Renovation loans average 4.18%, while personal loans, including personal lines of credit, average 6 to 9% per annum.
7. Compare renovation loans to find the best rates.
The cheapest renovation loan is only available from one or two banks every month. It's important to keep in mind that not all loan comparison sites work with all banks, so it's best to compare multiple sites to get the best deal. Note that your bank might also offer a cheaper renovation loan if you're just getting a home loan now. When you speak to the mortgage banker, there's no harm in asking for it.
As a promotional offer, some banks offer interest-free renovation loans. If you pay off the renovation loan during the interest-free period, you can also save money. Generally, this period lasts six months. A loan that cannot be repaid within the interest-free period will go back to the normal interest rate, which may not be the cheapest on the market.
8. Consider green loans.
In an effort to promote sustainability, some banks now offer lower interest rates for eco-friendly homes and renovations. Renovation loans in 2021 are typically around 4.18% per year. In contrast, green loans can cut this down to as low as 2.68%, depending on the bank.
A few criteria must be met, such as using energy-efficient appliances (five ticks on The Energy Label), using LEDs or other energy-efficient lights, using low volatile organic compound (VOC) paint, and so on. Generally, green loans don't represent any real restrictions because most homeowners do these common-sense things anyway. However, the green loan is currently nothing more than a marketing gimmick. They will grant you the lowered interest rates without any form of verification if you just tick "yes" for all items on the questionnaire for green loans.
In addition, when you buy a new launch unit, you can expect that any appliances included are already energy-efficient to five ticks. Many developers are also seeking sustainability awards.
9. Don't take out any loans.
Although it is tough, saving up for the renovation is a good idea if you can. It isn't necessary to save up the entire amount, but try to save about half.
Renovation loans have a high-interest rate, which reduces your returns and increases your recurring costs. Ironic that home buyers are unwilling to accept an extra 0.3% on their mortgage interest rate, yet take on a renovation loan at a rate above 4% in order to undo all the savings they've made.
10. Renovate in parts.
Remind yourself that it is possible to renovate in parts if you can't cover the entire cost at once. You can, for instance, ignore the living room and just renovate the bathrooms and bedrooms. In most cases, this will mitigate the need for credit, so the savings are often worth it.
11. Ask for basic maintenance upon purchasing.
Last but not least, remember that you can ask for basic maintenance during the buying process. Perhaps, as a condition of the sale, you would like the seller to replace all the worn and sagging doors. Your purchase price can be adjusted to include a portion of future renovation costs, thus saving you money. Your realtor should be able to handle this sort of negotiation, so make sure you work with one who is up to the job.
