Should you use a Personal loan for family planning?

    Even though the Singapore government encourages people to have kids, the cost of bringing up your kid right from the time they are born is a lot and many families struggle to arrange funds for their baby’s delivery. You will normally have to spend several thousand dollars for your baby’s delivery even in government hospitals.

    Using Medisave to pay for delivery expenses

    Under the Medisave Maternity Package, your delivery expenses will be taken care of. You can claim S$450 per day at the hospital and an additional S$900 to cover pre-delivery expenses. The withdrawal limits also depend on whether the delivery will be vaginal or cesarean. Additional surgical withdrawal limits are also provided up to S$2,150.

    Although you can use this Medisave scheme to pay for your expenses, the payout will stop once your baby is born. You cannot use this scheme to cover expenses post delivery after you leave the hospital. For costs incurred once you and your family are back home safe, you can use a personal loan.

    The interest that you normally pay for your personal loan is close to 8% p.a. in contrast to a credit card that charges an interest rate between 24% p.a. and 28% p.a. In some cases, customers who have opened a new bank account get interest rates which are as low as 4% p.a. when applying for a personal loan. Low interest rates naturally mean low monthly repayments, which in turn provide you with more flexibility for your growing family.

    Should you apply for a personal loan before the child is born or after?

    The timing of your personal loan application should depend on the preparations that you need to make before your child arrives. For instance, if you require a small nursery for your newborn, it would be best to apply for the loan early during the period of pregnancy. By doing so, you will have enough time to finish renovation work and purchase other essentials like the baby's cot.

    How much can be borrowed for family planning?

    The amount that you can borrow depends on policies of the bank and your credit history. Essentially, most banks lend up to four times the monthly salary for a personal loan, if you have a minimum yearly income of S$30,000. So if you have a salary close to S$30,000, you can borrow up to S$10,000.

    What are the eligibility criteria for a personal loan?

    In Singapore, you have to be 21 years or older and earn at least S$30,000 to obtain a personal loan. If you are a salaried or commission-based employee, you must share a scanned copy of NRIC, recent Income Tax NOA or recent payslips and last 12 months' CPF contribution statement.

    Even if you do not need money urgently, it is a better to apply for the loan well in advance of the expected date. With the enthusiasm of having a baby, you do not want to be concerned about whether you will get the loan or not. By having the loan approved before the baby arrives, you can have enough money to pay for necessities such as baby clothes, formula, diapers and bottles.

    If you and your partner are going through Assisted Conception Procedures, you can withdraw a maximum of S$15,000 (S$6,000 for the first treatment cycle, S$5,000 for the second and S$4,000 for the third) from your Medisave account to pay for treatments. If you think that you need more, consider obtaining a personal loan to pay for the costs. A personal loan can also prevent your bank balance from getting low. By doing so, you can focus entirely on your pregnancy, without stressing over large payments getting in the way of your ability to make ends meet.

    Personal loans can especially be useful to cover expenses after the birth of your baby. You do not need to state a reason for applying and the application process is hassle-free with quick disbursal of your loan amount.

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