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When to Use a Personal Loan for Home Renovations

SingSaver team

SingSaver team

Last updated 22 May, 2019

Under special circumstances, personal loans can help fund your home renovations in Singapore.


The problem with renovating your flat in Singapore is that you never know how much it will cost. Sure, a contractor may tell you it’ll cost $20,000, and a quotation is exactly what it is: a quotation. By the time all the renovations are done, you might spend twice that amount with all the add-ons or changing of minds.

This is when you need to start looking for the right personal loan for your home renovation.

Should a Personal Loan Be the First Option For Renovating Your Flat?

For home renovations, a personal loan is not the first loan you should take. Instead, look for renovation loans. Renovation loans tend to have a lower interest rate than personal loans of about 3 to 4% p.a.

You may also get the occasional special deal: Do a courtesy check-in with the banker you applied the renovation loan with, and she may even be able to get you an interest-free period. When you take a renovation loan, you will also be required to provide the bank with the original quotation from contractor.

However, a renovation loan may not be sufficient to cover the full cost of renovations. The cap on renovation loans is often six months of your income, up to a maximum of $30,000. This may not suffice to cover the entire cost of renovations.

As such, you may find a personal loan useful if:

  • The contractor goes beyond the given budget
  • Something goes wrong and you are forced to change contractors
  • Unusual situations where personal loan promotions beat renovation loan rates

1. The Contractor Goes Beyond the Given Budget

It’s not uncommon for contractors in Singapore to bust their budget. Always assume the renovation will cost 20% more than the projected amount. When your renovation loan proves insufficient, you can use a personal loan to make up the difference.

2. Something Goes Wrong and You Are Forced to Change Contractors

Hopefully, this never happens to you, but not all contractors have a seal of trust and guarantee. If your contractor closes down before work is finished, or you dislike their work and fire them, you need to inform your bank (particularly if they’ve disbursed the whole loan amount to the contractor).

For this reason, we advise that you avoid paying the contractor the whole sum at once (offer to pay half now, and half when the work is done).

If you cannot get a renovation loan – as you’ve already used it to pay your former contractor – you can look at personal loan options instead.

As a general tip, check out reviews on your contractor before contracting them to do your renovations –it's easy enough to ask on social media or on forums such as Renotalk. Owners of HDB flats can also consult HDB's list of registered renovation contractors just to make sure they're legit.

3. Unusual Situations Where Personal Loan Promotions Beat Renovation Loan Rates

Sometimes personal loans come with promotions, such as 0% interest for six months. If you feel you can fully pay for the renovations in that time (and can borrow a sufficient amount), you may want to use a personal loan instead. However, do be sure to pay it off on time, as the higher interest rate could mean paying more than a renovation loan.

You can compare and apply for different personal loans at SingSaver to ensure that you always get the best rate.

Alternatively, check out our summary of the Best Personal Loans in Singapore 2020 to see our recommendations for loans to fit different needs.

Read these next:
Best Renovation Loan in Singapore 2020
How to Do up Your Home Without Taking a Renovation Loan
Best Bank Loans You Can Apply For Under Each Loan Type In Singapore (2020)
5 Renovation Tips To Maximise The Value of Your First Home
Best Personal Loans In Singapore With The Lowest Interest Rates (2020)


At SingSaver, we make personal finance accessible with easy to understand personal finance reads, tools and money hacks that simplify all of life’s financial decisions for you.


Use a personal loan to consolidate your outstanding debt at a lower interest rate!

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