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In our article about how to buy a BTO flat, we went through all the steps you have to take to hopefully end up with your dream home. Whether you’re just about ready to ballot or have already paid your down payment, you may have questions about all the expenses that come with a new home.
Receiving your keys might still be a few years away, but you may want to use this time to plan out all associated expenses and create a manageable budget in advance.
Many couples choose to remodel their home after receiving their keys with the goal of personalising their new space. Whether your vision is minimalist and contemporary or classic with lots of storage space, the cost of renovating your flat is second only to how much you paid for the flat itself.
The average cost of renovating a 90 square metre, 4-bedroom flat is about S$55,000, but that can vary heavily depending on the style you decide on. Contemporary-styled homes tend to cost the most, while classic vintage styles cost the least. Regardless of the style, renovation costs can be broken down to the same few elements:
The materials you choose for your renovation in each of the above categories can affect the cost significantly. For example, choosing laminate flooring versus tiles can save you an average of S$5 per square foot. Having built-in cupboards can cost more than standalone wardrobes since they’re more difficult to install and fit.
In addition to your home loan, taking out a renovation loan can put further strain on your finances. A renovation loan has interest rates of between 4%-5% and terms are usually 3-5 years long. You should ensure that you can afford the repayment before deciding on the scale of your renovation, otherwise you may risk having debt problems in the future.
If for example you take out a S$15,000 loan and spread it over 5 years at an interest rate of 4.33%, your monthly repayment is estimated to be about S$280. Because you also have your mortgage to take care of, it’s advisable to keep your monthly renovation loan repayment to below 10% of your monthly income. If it isn’t possible, then maybe you should consider reducing the scale of your renovation.
Furnishing your home is no small feat. Whilst the renovation helps to bring part of your vision to life, you still have to choose individual pieces of furniture to place around the house. From beds and coffee tables to the pots and pans in the kitchen, there are a million little things to account for.
The first thing you want to do is prioritise so that you know which rooms definitely need to be furnished first. You might want to fill every room in the house at once, but that should actually be done in stages as it’s more wallet-friendly. For example, you probably want to fill the bedroom first, followed by either the kitchen or living room before you move on to the second and third bedrooms.
The next step would be to create a budget detailing how much you’re willing or able to spend on each item in the rooms you’ve chosen to fill. If getting a quality bed is of utmost importance, you may have to scrimp a little bit on the couch.
If there aren’t enough funds to go around, repeat the above steps (prioritise and budget) until all the rooms are filled. As much as possible, it’s important to choose quality over quantity, and it’s alright to take your time furnishing your home.
The last significant cost associated with owning your own home is maintenance costs. Unlike the first two, which only happen once in a very long time, maintenance costs are constant as long as you continue living in that house. According to a Harvard University study, you should plan to pay around 1%-2% of the value of your home every year on maintenance and upkeep.
If you live in an HDB flat, you should expect to pay service and conservancy charges to your respective town council to maintain the common areas. You can look up the amount you have to pay by visiting your town council’s website. For example, Ang Mo Kio Town Council’s rates range from $54.50 to $98 depending on property type.
This is in addition to maintenance like cleaning your air conditioning units, dealing with insect issues, or fixing leaky pipes.
Being aware of the costs you’ll incur when owning a property and creating a proper budget will ensure that you are financially prepared when you get your new home. Remember that it doesn’t need to be perfect right away, and you can take your time to make it the home you’ve always dreamed of without breaking the bank.