Finding The Best Renovation Loan In Singapore: A Guide

The journey to your dream home starts with your renovation. Here are the best renovation loans in Singapore for you to consider.

You've finally gotten the keys to your new home and it's time to start thinking about renovations. New Built-To-Order (BTO) flat owners may want to follow their own unique definition of industrial chic to a T, whereas resale flat buyers may want a complete do-over for a brand new feel. Either way, that’s where renovation loans come into play. 

Just like a personal loan, the key factors to consider are interest rates (including the Effective Interest Rate, or EIR), loan tenure, fees, and maximum loan amount. One other thing to note: if you already have an existing home loan with a bank, it may be worthwhile to get your renovation loan from the same bank.  They may offer a preferential rate and reduce the complexity of managing multiple loans. 

Table of contents

• How do renovation loans work in Singapore?
• Best renovation and personal loans in Singapore
• Best for low interest with long tenure
• Best for lowest annual income requirement
• Best for ecologically friendly renovations
• Best for lowest interest rate for large loans
• Conclusion

How do renovation loans work in Singapore?

Home renovation loans are a type of unsecured loans in Singapore. Compared to personal loans, they have some distinct features, such as:

• Maximum loan amount of S$30,000
• Provision of Cashiers’ Orders, which are used to pay your contractor or ID firm 
• Proof of renovation work, including official quotation or invoice from a renovation company, before-and-after photos, and even site visits
• Restricted to renovation work only; cannot be used to purchase furniture

Yes, renovation loans can seem restrictive, and we can only imagine why. But they do come with some advantages too. For instance, instead of paying your contractor in cash, you can issue Cashier’s Orders made out to your appointed renovation company. This can help you avoid being scammed. Also, home renovation loans allow joint applications with one other person, so couples can take on the debt together. 

However, homeowners can also use personal loans to fund their home renovations. Interest rates are competitive – even lower, as you’ll see –, there’s a higher loan cap, no quotation or invoice is needed, and there’s no restrictions on what you can spend the money on!

In fact, personal loans have become as capable as renovation loans, and homeowners can choose either one to finance their renovation works, according to their needs and preferences. How much do home renovations cost?

How much a home renovation costs will depend on the extent of the work you want done, as well as the materials and fittings you choose. An Italian marble kitchen counter is going to be markedly more expensive than, say, one made of mica. 

Often, how much to spend on your home renovation will also be influenced by the purpose of the renovation. Let’s consider two different scenarios. 

Read also: Should You Take an In-house Renovation Loan From Your Interior Designer?

Flipping and selling

If you’re looking to renovate an investment property, one meant to be rented out or sold quickly for a profit, it may not be prudent to spend too much. 

Here, your goal is simply to refresh the property and make any needed repairs so as to fulfil the needs and expectations of would-be tenants or buyers. 

You’ll also want to keep things basic to cater to a larger selection of prospective renters or homeseekers, so there’s no point investing in extensive renovations or alterations, nor splurging on expensive finishes that may end up ruined by careless tenants, or price your property out of the market for interested buyers.
 

Renovating your forever home

If, on the other hand, you’re renovating the property with a view of staying in it long term, then it’s more justifiable to apply for a larger home renovation loan.

You likely want to design your home to suit your needs, and style it up in a fashion that reflects your personal aesthetics. This may mean more extensive alterations, higher quality materials and fittings, and even designer furniture to complete the look. 

Read also: How To Do Up Your Home Without Taking A Renovation Loan

Best renovation and personal loans in Singapore

Best for low interest with long tenure: HSBC Personal Loan

If you are looking for a low interest loan with long tenure, look no further than HSBC.

HSBC may not have a specialised home renovation loan at hand, but its personal loan would serve you well starting from 3.6% p.a. (EIR 6.5% p.a.) interest rate, given that annual income of applicants is S$30,000 and above. Even better news: processing fee is at an absolute zero for those who apply via SingSaver.

One other edge HSBC’s personal loan has over other banks’ renovation loans is the longer loan tenure allowance at up to seven years. If you are planning for a swanky renovation that requires a longer time horizon to finance, this may be the option for you. 

Minimum loan amount is S$1,000 and the maximum you can borrow is 4x your monthly income (applicable for annual salary of S$30,000 to S$119,999), or 8x if you are drawing S$120,000 and above.

Best for lowest annual income requirement: Standard Chartered CashOne Personal Loan 

With a guaranteed flat interest rate starting from 3.48% p.a. (EIR from 6.95% p.a.), the Standard Chartered CashOne Personal Loan is a solid low-interest option for homeowners.

Another attractive feature is its low annual income requirement of S$20,000 per annum, which puts this loan within reach for those with lower incomes. 
Standard Chartered charges a first year annual fee of S$199. From the second year onwards the S$50 annual fee is waived if all instalments for the year are paid on or before the due date.

You may borrow up to 4x your monthly salary or a maximum loan amount of S$250,000, repayable up to a maximum of five years. For those earning annual income of S$30,000 and above, you can take advantage of the 5-year annual fee waiver on the accompanying Standard Chartered Platinum Visa credit card to better manage your daily expenses. 

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Best for ecologically friendly renovations: DBS Eco-aware Renovation Loan 

Make your home renovations ecologically friendly and enjoy preferential interest rates on your renovation loan.

This is possible with the DBS Eco-aware Renovation Loan, which offers interest rates as low as 4.68% p.a. (EIR 5.41% p.a.) when you take steps to reduce your carbon footprint when renovating your home. You’ll qualify if you fulfil at least six items on the 10-point Eco-aware Renovation Checklist.

This home renovation loan also comes with a processing fee equal to 1% of the approved loan amount, as well as insurance premium of 1% – the latter will pay off the outstanding renovation loan balance in the event of death or total and permanent disability.

Read also: Comparison: DBS vs Maybank Renovation Loan 

Best for lowest interest rate for large loans: CIMB Personal Loan

The CIMB Personal Loan is among the best choices for those seeking a large loan amount, thanks to its tiered structure.

If you’re borrowing S$10,000 and above – highly likely for most home renovations – you can access the most favourable interest rates of 4% p.a. (EIR 7.3% to 7.5% p.a.) for loan tenures of 1 or 2 years, and an even lower rate of 3.38% p.a. (EIR 6.32% to 6.38% p.a.) for tenures of 3, 4 or 5 years.

On top of that, loans of S$5,000 or more will see the admin fee of 1% waived off, helping you further save on borrowing costs.

As such, the CIMB Personal Loan could end up being the most affordable choice if you’re looking to borrow larger amounts over longer tenures.

Note that as this is a personal loan, there are no Cashier’s Orders included, but you could always purchase them from the Bank if needed to help you manage your payments to your contractor or ID firms.

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Conclusion: Financing for every home renovation

Between the many personal loans and renovation loans available, homeowners can find a wide variety of options for every type of home renovation. 

Even though interest rates for renovation loans (and personal loans too) are affordable, it’s important not to overspend when renovating your home. 

Be sure to check SingSaver for the best renovation loans, offers and promotions that give you value you won’t find anywhere else.