Home renovations in Singapore are not cheap. In 2024, Singaporeans shelled out over S$34,000 for renovating a 3-room flat and over S$52,000 for remodeling a 4-room flat. Unsurprisingly, some families choose to manage the resulting cashflow shortfalls by taking out a loan. This can be in the form of renovation or personal loans. While renovation loans seem like the logical solution to funding your home renovation project, personal loans come with the benefit of higher maximum loan amounts. They also offer comparable interest rates to renovation loans.

Let’s examine both types of loans in greater detail together.

As you can see from the above table, interest rates and tenures across both types of loans are on par. The biggest difference between personal loans and renovation loans is the maximum loan amount. Unlike renovation loans, personal loans come with less restrictions when it comes to how you use the funds disbursed to you. One example is how renovation loans frequently exclude furnishing costs, which can be annoying for some applicants. Property ownership is another key differentiator between the two loans. While you don’t need to prove ownership of property to take out a personal loan, this is required for renovation loans. 

Our bottom line? Those expecting renovation costs to be significantly higher than S$30,000 may want to opt for taking out a personal loan to better manage their cashflow. 

Renovation loans typically limit the maximum loan amount to 6 times your monthly income, or S$30,000, whichever is lower. For those expecting to spend much more than that on major renovation projects, a personal loan may be more useful in helping to defray expenses. Other benefits of personal loans over renovation loans include the greater flexibility you have over utilising your funds, as well as faster approvals.  

Let's delve into when you should consider using a personal loan to offset your renovation costs.  

1. You can borrow a larger loan amount 

It’s not uncommon for contractors in Singapore to overrun their budget. Always assume the renovation will cost 20% more than the projected amount. However, since you can only take up to S$30,000 for a renovation loan, it might not be enough to cover your home renovation project. 

This is when a personal loan can come in handy. With personal loans, you can borrow up to at least 4 to 6 times your monthly salary, or up to S$200,000. If you meet the bank's eligibility criteria, you benefit by becoming automatically entitled to larger maximum loan amounts. Some banks, like DBS Bank, allow for individuals with a minimum annual income of at least S$120,000 to borrow up to 10 times their monthly salary. The larger loan sum may prove useful especially for major overhauls.  

Compare Renovation Loans 

2. Personal loans offer greater flexibility

Unlike renovation loans, personal loans are not tied to any purpose. This means you won't need to keep receipts or be subject to site visits for loan approval purposes. DBS Bank, for example, clearly states that their renovation loan can only be used for the following: 

• Painting and redecorating 

• Structural alterations

• Solar panel installation works

• Electrical wiring

• Built-in cabinets

• External works within your property

• Flooring and tiling works

• Basic bathroom fittings 

They also go out of their way to say that renovation loans cannot be used to pay for furnishing costs. If you take out a renovation loan and any work conducted isn't on the bank's list of approved renovation works, you could end up forking over the difference from your own savings. 

On the other hand, you don't have to justify the way you spend your personal loan, which is disbursed to you without any restrictions. This means you can use it for everything from structural alterations, lighting works, to purchasing new furniture and home appliances.

3. It's faster than a renovation loan 

Since a renovation loan can only be used for home renovation works, approval is subject to the ability to provide documentation such as renovation quotations, proof of home ownership and renovation permits. As such, any delays you encounter in obtaining the documentation needed will also result in delays in obtaining your renovation loan. In contrast, the process of getting approval for personal loans is much simpler. In the case of online applications, many banks offer instant approval for those applying via MyInfo on SingPass. 

Compare Personal Loans

CIMB, DBS and UOB Bank stand out for having some of the lowest interest rates on the market at 1.86% p.a., 1.99% p.a and 1.85% p.a. respectively. Here’s who they are best suited for:

• Borrowers after short tenures: DBS Personal Loan. Want to pay off your personal loan so you don’t have to think about it anymore? Pay it off in just 6 months with DBS Personal Loan while enjoying their low interest rates.

• Malaysian citizen residing in Singapore: CIMB Personal Loan. Although you’ll be subject to a minimum annual income of S$30,000 versus the S$20,000 required for Singapore Citizens and PRs, it’s still easy to get your loan approved if you meet all other qualifying criteria. 

• Borrowers who need larger loan sums: Get up to S$200,000 to defray your renovation expenses while benefitting from UOB Bank’s low, low interest rates of just 1.85% p.a. — one of the lowest on the market! 

1. You’re a HDB Home Loan customer

You have an existing HDB Home Loan, but you’re thinking about taking out another loan to help finance your home renovation. Maybank’s Renovation Loan is offering a promotional rate of 2.50% p.a. for HDB Home Loan customers for the first year of their loan. This is significantly lower than their usual rate of 8.35% p.a. — an incredible bargain, especially for those who are confident that they can pay off their home renovation loan in 12 months.

2. You’re struggling to meet the minimum income requirement

In between jobs but can’t put off your home renovation project? If you don’t meet the minimum annual income of S$20,000 for personal loans, consider TCC Credit Co-operative’s renovation loan. Though it is also capped at S$30,000 like all renovation loans, their minimum monthly salary requirement is S$1,200. This works out to be about S$14,400 per year, possibly the lowest in the market.

3. You’re a Trust Bank customer

Existing Trust Bank customer and shopping for renovation loans? Trust Bank’s renovation loan is really just their personal loan rebadged, and operates in a slightly different way from other loans. Instead of having a set maximum loan amount cap, how much you can borrow is directly tied to your available Trust Credit Card limit. You also have the advantage of relatively low interest rates, at 1.99% p.a. and a flexible loan tenure between 3 months to 5 years. 

Taking out a loan to finance costly home renovation projects can be a headache-inducing exercise. Ultimately, whether you choose to take up a personal or renovation loan to cover your home renovation costs depends on your financial situation and the scope of your renovation project.