Renovation loan: cost the job before you borrow

A renovation is one of the easiest things to overspend on, because the decisions keep coming after the budget is set: a better tile, one more socket, a wall that turns out to hide a pipe. Borrowing for it is sensible when the job is planned and costed. Here is how to get to a number you can trust.

Step 1: Separate must-do from nice-to-have

Write two lists. The first is work that fixes a real problem: leaks, wiring, a bathroom that no longer drains, a kitchen that cannot be used safely. The second is everything you would like. Cost both, but borrow for the first list and only as much of the second as fits comfortably.

Step 2: Get itemised quotes

Ask two or three contractors for a quote that lists each item with its quantity and price: demolition, plumbing, electrical points, tiling by area, cabinetry by length, painting, disposal, and the materials with brand and grade. A quote that says "kitchen renovation RM 25,000" tells you nothing about what happens when you ask for one more cabinet.

Compare quotes line by line. Large differences usually mean one contractor has left something out, not that the other is expensive.

Step 3: Add a contingency

Set aside 10% to 15% of the quoted total for things that only appear once work starts. If the money is not needed, you repay the loan faster. If it is needed and you have not borrowed it, the job stalls half-done, which is the most expensive outcome of all.

Step 4: Check the contractor

• Ask for the business registration and, for larger or structural work, whether the contractor is registered with the Construction Industry Development Board (CIDB).
• Ask for photos and addresses of recent jobs, and call one of the customers.
• Check whether the work needs approval from your local council or, in a strata property, from the management. Structural changes and anything touching shared walls, drains or the façade usually do.
• Put the scope, price, schedule and payment stages in writing, signed by both sides.

Step 5: Turn the total into an instalment

Suppose the quotes come to RM 26,000 and you add 15%, giving roughly RM 30,000. At MyOneCredit's flat rate of 4.88% a year:

The 84-month plan has the lowest instalment but costs RM 5,856 more in interest than the 36-month plan. Choose the shortest tenure whose instalment fits alongside your existing commitments with a buffer to spare. The affordability check works this out from your own income.

Alternatives to compare first

• Savings first, loan for the balance. Borrowing only the gap keeps the interest down.
• Phasing the work. Doing the bathroom this year and the kitchen next year may cost slightly more in total but needs a smaller loan now.
• A renovation top-up on an existing home loan. If you have a mortgage, ask your bank. It may be cheaper, though it can take longer to arrange and ties the cost to your home.

Mistakes to avoid

• Starting work before the money is in your account.
• Changing the design after work starts. Every change costs more than it would have on paper.
• Paying cash with no receipts. Keep every invoice; you will need them if there is a dispute.
• Borrowing for furniture and appliances on top of the works without costing them separately.

Common questions

Can I borrow for a home I rent? The loan is a personal loan and can be used for any lawful purpose, but check your tenancy agreement first: most require the landlord's consent for alterations, and you may not recover the cost when you leave.

Do I need to show the quotes? Our assessment looks at your income, commitments and repayment history, not the contractor's quote. The quote is for your own budgeting.

What if the job comes in under budget? You can settle early at any time with no fee, but interest under a flat rate is not refunded, so borrow the quote plus contingency and no more.

Next steps

Get your quotes, add the contingency, and put the total into the calculator. Then see what documents you will need and message us on WhatsApp.