Should I take up a renovation loan at 3.88% p.a, accumulated monthly if my renovation will cost about $16k?

3.88% is high. But if u really need to take loan, then no choice, u must take.

Then u must make paying off this debt top pirority. Below is an calculation eg. The interest of paying $1000 vs $500 per month. U can calculate yourself, how much u can commit per month, and if the interest is acceptable for u , then take the loan.

http://www.moneychimp.com/features/debt_payment...

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3.88% is high and I am assuming the 16K renovation is sort of inevitable?. If it’s something that can be pushed into the future, I would push it and get it done a few months later. If it cannot be pushed, then it comes down to how much you currently save on a monthly basis.

If you are able to fill the 16K whole in your saving within 3-4 months and you are sort of guaranteed on your employment until then, then take it out from your savings (assuming the savings are uninvested).