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When to Use a Personal Loan for Home Renovations

SingSaver team

SingSaver team

Last updated 22 May, 2019

While a renovation loan is the default loan for home renovations, under special circumstances, personal loans can help fund your home renovation projects too.

When it comes to home renovation, most people consider taking out a renovation loan or a personal loan to help them cope with their cashflow shortfalls.

As the name suggests, a renovation loan sole's purpose is to help with home renovations, be remodeling your home, getting new fixtures or furniture, or even making improvements.

However, the problem with home renovations is that you never know how much it will cost. Sure, a contractor may tell you it’ll cost S$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 personal loan might help with your home renovation. While the interest rate for personal loans is slightly higher, it offers a higher maximum loan amount. Furthermore, a personal loan doesn't have as much restrictions compared to a renovation loan. 


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Why you should consider getting a personal loan for your home renovations

A renovation loan might be the preferred option for home renovation, as the lender can offer you more favourable rates. Moreover, you can borrow up to 6x your monthly income, or a maximum of S$30,000. 

That said, a renovation loan is not without its shortcomings; below are some of the reasons why you may want to consider taking a personal loan instead.  

1. You can borrow a larger loan amount

It’s not uncommon for contractors in Singapore to bust 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 for fund your home renovation project.

However, as mentioned 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 S$30,000. This may not suffice to cover the entire cost of renovations.

This is when a personal loan can come in handy. With a personal loan, you can take a larger loan amount if you meet the eligibility, and some banks like CIMB even allow you to borrow up to 10x your monthly income, or up to S$200,000. The larger loan amount may prove useful especially for major renovations. 

2. A personal loan offers greater flexibility

Unlike a renovation loan, which is only available exclusively for home renovations. Your bank may also conduct a site visit to ensure that the loan is being used for approved renovation works, such as carpentry, wiring, or flooring works.

If the list of items, installations, or approved works don't fall under the list, you won't be able to deduct them from the loan. This means that you may need to fork out the difference from your own savings. 

On the other hand, a personal loan offers more flexibility and can be used for a variety of purposes, including for renovating your home. You don't have to justify the reason for using the funds and can use it without any restriction. This means you can use it for anything whether it's structural alterations, lighting works, or 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, you'll need to provide various documentations such as renovation quotations, proof of home ownership, signed invoices, income documentations, or renovation permits. This means that 

In contrast, the process of getting a personal loan is much more simplified and faster. In fact, you can get instant approval for your loan when you apply online via MyInfo on SingPass. 

Best personal loans in Singapore to consider

Personal loan Maximum loan amount  Interest rate Loan tenure
CIMB Personal Loan
Up to 8x your monthly income, capped at S$200,000 From 2.80% p.a. (EIR 5.28% p.a.) One to five years
Citi Quick Cash Loan
Up to 8x your monthly income From 3.45% p.a (EIR 6.50% p.a) One to five years
DBS Personal Loan
Up to 10x your monthly income From 2.88% per annum + 1% processing fee (EIR 5.79% p.a.) Six months to five years
HSBC Personal Loan
Up to 8x your monthly income, capped at S$200,000 From 3.60% p.a. (EIR 6.50% p.a.) One to seven years
OCBC ExtraCash Personal Loan
Up to 6x your monthly income From 2.88% p.a. (EIR from 5.84% p.a.) One to five years
UOB Personal Loan
Up to 2x your monthly income or S$200,000, whichever is lower 2.88% p.a. (EIR from 5.43% p.a.) One to five years

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


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.


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