An Ultimate Guide to Getting Renovation Loan in Singapore

In Singapore, where property prices are notoriously high, home ownership is considered a significant personal investment and asset. Whether you’re a homeowner or a landlord, maintaining a clean, functional, and appealing property is essential to attract tenants or create a comfortable living space for your family.

Moreover, renovating your home can be exciting, whether you’re looking to spruce up your living space or add value to your property. However, financing your renovation project can sometimes be a daunting task.

This is where renovation loans come in handy, providing the necessary funds to renovate your home according to your dreams. In Singapore, obtaining a renovation loan involves understanding the eligibility criteria and finding the right lender.

This ultimate guide aims to simplify securing a renovation loan in Singapore, helping you go through the process quickly. So, let’s get started.

What is a Renovation Loan in Singapore?

A renovation loan is a personal loan designed to finance home improvement projects. It allows homeowners to borrow funds to upgrade, repair, or enhance their residential properties. These loans typically have lower interest rates than other personal loans, making them an attractive option for those looking to renovate their homes without draining their savings.

Simple Step-By-Step Process To Get Renovation Loan in Singapore

1. Renovation Loan Usage

What your renovation loan can be used for renovation are typically utilized for a variety of home improvement purposes, including:

• Electrical and wiring works
• Installation of solar panels
• Built-in cabinets and carpentry
• Painting and wallpapering
• Hacking and structural alterations
• Flooring and tiling works
• Sanitary fittings
• External works within the house compound

These loans apply to renovation projects in all residential housing types, including BTO, HDB, condominiums, and landed homes.

What Your Renovation Loan Cannot Be Used For:

While renovation loans cover many home improvement expenses, they do not extend to furniture or appliance purchases. This means expenses such as air conditioning units or designer furniture are not included in the loan coverage.

However, some banks, like RHB, provide separate furnishing loans to assist with furniture purchases if needed.

2. Eligibility Criteria

Before applying for a renovation loan in Singapore, it’s crucial to ensure that you meet the eligibility criteria set by financial institutions. While specific requirements may vary between lenders, some standard eligibility criteria include:

• Age: Applicants typically need to be between 21 and 65 years old.
• Income: Lenders often require a minimum annual income to qualify for a renovation loan.
• Credit Score: A good credit score improves your chances of approval and may lead to better loan terms.
• Ownership: You must be the owner of the property undergoing renovation or have the property owner’s consent.

Here are details of the different renovation loans in Singapore for other banks:

3. Renovation Loan Interest Rates

Many people mistakenly believe that renovation loans come with high-interest rates. However, they are lower and more cost-effective compared to personal loans.

The interest rates for home renovation loans typically range from 3-4% per annum, whereas personal loans can have rates around 6-9% per annum.

It’s important to understand that interest can be calculated in two ways:

• Flat Rate: The interest is calculated based on the principal amount in this method. While it may seem straightforward, it can become more expensive than the monthly rest rate.
• Monthly Rest Rate: With this approach, interest is charged only on the outstanding amount, making it potentially more affordable than the flat rate.

When considering a renovation loan promotion from a bank, evaluating the offer carefully is essential. While it may appear attractive with reduced interest rates or waived processing fees, conducting thorough calculations and planning is crucial.

This ensures that you can comfortably manage the monthly repayments for your desired loan amount within an acceptable tenure.

By understanding the different interest rate structures and carefully evaluating loan offers, you can make informed decisions and find a renovation loan package that suits your needs and financial situation.

4. Quantum, Tenure, and Key Features of Each Loan

Below is a summary of critical features for renovation loans provided by different banks in Singapore. These details can help you choose a renovation loan that best suits your needs and financial circumstances.

5. Critical Features for Different Banks Offering Renovation Loans in Singapore

DBS Eco-aware Renovation Loan:

• Borrow up to S$30,000 or 6 times your monthly income (whichever is lower).
• Loan tenure of up to 5 years.
• Online application via iBanking login.

DBS Renovation Loan:

• Borrow up to S$30,000 or 6 times your monthly income (whichever is lower).
• Loan tenure of up to 5 years.
• Online application via iBanking login.

Maybank Renovation Loan:

• Interest rates from 3.88% p.a. for existing Home Loan customers. Your renovation loan application must be approved with a minimum loan quantum of S$15,000 and a minimum loan tenure of 3 years.
• Attractive renovation loan interest rate from 4.98% p.a. (Renovation Loan Board Rate less 3.92% p.a.) for new customers.
• The loan amount is up to 6 times your monthly income or S$30,000 (whichever is lower).
• Loan tenure up to 5 years.

HSBC Renovation Loan:

• Enjoy interest rates from 4% p.a. onwards.
• 1 min in-principal approval.
• A. EIR ranges from 7.5% – 15%.
• Note that the rates provided to you are customized and might differ from what is displayed here. The Monetary Authority of Singapore regulates HSBC.

Standard Chartered CashOne (Renovation):

• Get your loan disbursed in your account within 15 minutes!
• Borrow up to 4 times your monthly income, subject to a max loan amount of S$250,000.
• Enjoy interest rates from 3.48% p.a.
• Note that the rates provided to you are customized and might differ from what is displayed here.
• Enjoy 0% interest rates for a 1-year loan tenure, with 4.5% processing fees that will be deducted from the total disbursed loan.

6. Research Qualified Lenders:

Take the time to explore your options and compare renovation loan offerings from different financial institutions in Singapore. Look for legal moneylenders that offer competitive interest rates, flexible repayment terms, and favorable loan conditions.

Doing your research ensures you find a lender that fits your needs perfectly and helps make your renovation dreams a reality.

Conclusion

Securing a renovation loan in Singapore doesn’t have to be a complicated process. By understanding the eligibility criteria and adhering to best practices, you can successfully finance your renovation project and transform your home according to your vision.

Conduct thorough research, compare loan offerings, and choose a reputable lender that best suits your needs. With the right approach, you can embark on your home renovation journey with confidence and peace of mind.

Are you looking for a reliable renovation loan lender in Singapore? Look no further! Visit LoanCFI today to research and connect with qualified lenders who can help finance your home renovation projects.

Don’t let financing hurdles hold you back from transforming your home.