In what case would you take a renovation loan in Singapore? Picture this.
Imagine: you’ve picked the best mortgage loan for your home, the next item on your list is renovation. By this time you would perhaps be feeling the financial pinch already and may have withdrawn some of your CPF for the downpayment of your new home.
So how do you fund the cost of renovations for your new property that can easily range between $10,000 and $100,000? Enter renovation loans.
In Singapore, banks provide home renovation loans. The interest rates for a renovation loan is by far lower than that of a personal loan, the tenures are shorter at a maximum of only 5 years, with a general maximum loan amount of 6 times your monthly wages and a cap of $30,000.
With the perks provided, there are of course criteria and guidelines to be followed.
Home Renovation Loans in Singapore (2022 Update): Which Is the Best Renovation Loan?
Here is a quick comparison of some of the renovation loan packages that are available in Singapore. This is based on a loan amount of $30,000 and a tenure of 3 years.
|
Bank/Loan Package |
Interest Rates (p.a.) |
Monthly Repayment |
|
CIMB Renovation i-Financing |
4.33% |
$890.13 |
|
OCBC Eco-care Renovation Loan Monthly Rest |
3.98% |
$885.45 |
|
OCBC Renovation Loan Monthly Rest |
4.18% |
$888.12 |
|
Maybank Renovation Loan Monthly Rest |
4.10% |
$887.05 |
|
DBS Green Renovation Loan |
3.88% |
$881.46 |
|
DBS Renovation Loan |
3.68% |
$884.12 |
Renovation Loan Criteria in Singapore
In order to qualify for a renovation loan, a Singaporean bank will require the applicant to:
- Own a property
- Be a Singaporean Citizen or PR
- Have a good credit score
- Fulfil the minimum income requirement (bank dependent)
There are also limitations on what the loan can be used for, including:
- Electrical works and wiring
- Tiling, flooring and painting
- Basic bathroom fittings
- Property’s external compounds
Renovation Loan Singapore: Miscellaneous Fees
On top of the loan, be prepared to fork out more dough in the form of fees. There will be several fees to pay, such as the disbursement fees, processing fees, and if applicable, late payment fees.
The disbursement fees are usually 1% of your approved loan amount. On the occasion that the borrower incurs late payment fees, they will need to be prepared to be charged about 5.7% of their loan amount.
You can use a renovation loan calculator to work out the amount you need. You can also put in the legwork to enquire and compare renovation loans across the various banks in Singapore to determine the best renovation loan.
Before Taking a Renovation Loan in Singapore, Know Your Loan Quantum
The loan quantum is based on your household income, the margin of finance (otherwise known as the Loan-to-Value (LTV) ratio) and your Total Debt Service Ratio (TDSR)
Different banks have different qualifying factors, with the majority of the banks offering loans up to 6 times your monthly income.
Related article: How Much to Budget for A New Home: A Complete Breakdown of Payments
Renovation Loan Singapore: Borrowing from Your Home Loan Provider
You can usually get a discount if you were to obtain your home renovation loan from the same bank that provided you with your home loan. Many of the websites such as POSB and OCBC, will in fact enquire if you have an existing home loan with them before they allow you to proceed to the calculation.
Renovation Loan Singapore: Comparing Home Renovation Loans
Let’s take a look at some of the home renovation loans in the market as of March 2022, based on a loan amount of $30,000 and a tenure of 3 years.
CIMB Renovation i-Financing
|
Loan amount |
$30,000, with a tenure of 3 years |
|
Interest rate (p.a.) |
4.33% |
|
Monthly instalment |
$890.13 |
|
Total payable interest |
$2,044.68 |
|
Processing fees |
0% of approved loan amount |
OCBC Eco-care Renovation Loan Monthly Rest
|
Loan amount |
$30,000, with a tenure of 3 years |
|
Interest rate (p.a.) |
3.98% |
|
Monthly instalment |
$885.45 |
|
Total payable interest |
$1,876.20 |
|
Processing fees |
0% (but there is a 0.50% admin fee on loan amount charged) |
OCBC Renovation Loan Monthly Rest
|
Loan amount |
$30,000, with a tenure of 3 years |
|
Interest rate (p.a.) |
4.18% |
|
Monthly instalment |
$888.12 |
|
Total payable interest |
$1,972.32 |
|
Processing fees |
0% (but there is a 0.50% admin fee on loan amount charged) |
Maybank Renovation Loan Monthly Rest
|
Loan amount |
$30,000, with a tenure of 3 years |
|
Interest rate (p.a.) |
4.10% |
|
Monthly instalment |
$887.05 |
|
Total payable interest |
$1,933.80 |
|
Processing fees |
1.0% of the approved loan amount |
DBS Green Renovation Loan
|
Loan amount |
$30,000, with a tenure of 3 years |
|
Interest rate (p.a.) |
3.68% |
|
Monthly instalment |
$881.46 |
|
Total payable interest |
$1,732.39 |
|
Processing fees |
1% of the approved loan amount |
DBS Renovation Loan
|
Loan amount |
$30,000, with a tenure of 3 years |
|
Interest rate (p.a.) |
3.88% |
|
Monthly instalment |
$884.12 |
|
Total payable interest |
$1,828.29 |
|
Processing fees |
1% of the approved loan amount |
This is another example of choosing your home renovation package carefully. As can be seen, DBS offers a package with the lowest interest rates and monthly instalments. But OCBC offers (perhaps?) the lowest processing fees. Calculations will need to be done in order to pick the best package.
Another thing to look out for is the freebies that the banks will throw your way. Take those into account, see if the freebies will help you lower your repayments. If they don’t, trade them away and bargain for a better deal.
Again, select the package that gives you the most value. Take into account all your other loans such as your education loan, mortgage loan and vehicle loan, and then try to keep your home renovation loan repayment to only 30% of your debt-to-income ratio.
Now all that’s left to do is to start renovating your home! Here are some articles to get you started:
- 7 Renovation Tips to Maximise Space in Your Small Apartment
- 5 Top Luxury Interior Design Trends to Look Out For in 2021/2022
- Renovation Contractor vs Interior Designer: Which Should You Pick?
- 9 HDB Renovation Permits and Guidelines You Need When Renovating Your Home
More FAQs Related to Renovation Loans in Singapore
Can I Pay My Renovation Loan With CPF?
No, you cannot use your CPF savings to finance your renovation loan.
Does HDB Provide Renovation Loan?
No, HDB provides housing loans, not renovation loans.
How Do I Get a Renovation Loan?
First, you will need to ensure that you have met the criteria for application. After which, you may apply for the loan online or at the bank by providing the necessary documents.
Is Renovation Loan a Good Idea?
As with any loan, the cost to borrow will always be there through interest rates. The good thing about renovation loans is that the interest rates are significantly lower than a normal loan, making it not as costly an investment to take.
Disclaimer: Information provided on this website is general in nature and does not constitute financial advice.
PropertyGuru will endeavour to update the website as needed. However, information can change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs.PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyGuru, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person.
