Should we settle our renovation loan early?

There is usually an early settlement fee that you need to consider. Compare this early settlement fee against the balance interest that you will be paying for the loan and see if there are any savings. If yes, it could be a good idea to go ahead.

Check the terms and conditions to find out whether there is any penalty for early settlement.

Next, find out the effective interest rate of the loan and whether you can earn a higher guaranteed rate. In general, this is pretty much impossible.

As a result, go back to the basics by understanding your cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-pers...

From there, we can ascertain whether it is financially the right step to do, or will it cripple your finances in the short term.

In most cases, it makes sense to settle the loan early and free up your cashflow in the future.

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