Monthly Repayment (Based on $30,000 loan)
|HSBC's Personal Loan||3.4%|
EIR 6.5% p.a.
|Standard Chartered CashOne Personal Loan||3.48%|
EIR 7.99% p.a.
|DBS Renovation Loan||3.88%||S$884|
|OCBC Renovation Loan||4.18%|
EIR 5.19% p.a.
|Citi Quick Cash - New Citi Customer||3.45%|
EIR 6.5% p.a.
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How much do home renovations cost?
Home renovations can cost anything from S$20,000 to S$70,000. The cost of your home renovation depends on factors such as the size of your home, extent of work required, materials and choice of contractor.
Read this article to find out how much you should pay for a home renovation in Singapore.
What should you look out for in a renovation loan?
When choosing a renovation loan, look out for the following:
Must you get a renovation loan for your home renovation?
In an ideal scenario, you should have enough savings to pay for your home renovation. Taking a renovation loan comes with 3% to 7% interest cost. However, there are scenarios where renovation loans are necessary, an example being those who want to move into their house on short notice but are lacking the funds to carry out the renovation.
Do keep in mind that renovation loans do not cover expenses outside of the renovation, such as your furniture and fittings.
What are the tenures and maximum APR for each loan?
|Renovation Loan||Min. Repayment||Max. Repayment||Max. APR||Total Loan (Based on S$10k across 1 year)|
|Citi Quick Cash - New Citi Customer||1 year||5 years||4%||S$10,350|
|DBS Renovation Loan||1 year||5 years||3.27%||S$10,588|
|OCBC Renovation Loan||1 year||5 years||4.61%||S$10,568|
|CIMB Renovation-i Financing||1 year||5 years||4.41%||S$10,347|
|HSBC Personal Loan||1 year||7 years||8%||S$10,356|
|Standard Chartered CashOne Personal Loan||1 year||5 years||3.80%||S$10,388|
A renovation loan is a loan that can be taken when you require capital for your renovation. Renovation loans tend to have lower interest rates than personal loans and have loan tenures of between 1 and 5 years. You make monthly repayments to pay off the loan by the end of the loan tenure.
When your application for a renovation loan is approved, the approved loan amount will be disbursed directly to the contractors in the form of a cashier’s order. Site visits may be conducted post-disbursement, to ensure that the loan is being used for the stated renovation works listed in the quotation.
Renovation loans can be used to pay for parts of your renovation, including:
A renovation loan cannot be used for purposes outside of a renovation. This means that it cannot be used to pay for furniture, fittings, and other decorative accessories such as sofas, tables, curtains, mattresses, household appliances and more.
The maximum amount you can borrow for a renovation loan is 6 times your monthly salary, or S$30,000, whichever is lower. You should try to determine the renovation costs before taking a renovation loan, to ensure that you do not borrow more than you need.
No, you cannot pay for a renovation loan with CPF. However, if you opt for the Optional Component Scheme (OCS) when applying for your Build-To-Order (BTO) HDB flat, you can use your CPF to cover the cost of the OCS.
To apply for a renovation loan, you have to be:
If you do not qualify for a renovation loan, you can consider applying for a personal loan instead. However, keep in mind that personal loans tend to have higher interest rates.
If you have used up the amount borrowed from your renovation loan, you can opt to take a personal loan to cover the additional costs incurred.
Most renovation loans allow you to borrow up to S$30,000. If you require more than S$30,000 for your renovation, it is possible to submit two different applications to two different banks. However, this would also mean having to commit to two different loan repayments every month. Alternatively, you can consider applying for a personal loan that has a higher borrowing limit.
Before you take on multiple loans, check how much your debt obligation will add up to each month. The Total Debt Servicing Ratio (TDSR) limits the amount of monthly debt obligations you can take up, based on your gross monthly income. With the current TDSR at 60%, your total monthly debt obligations cannot exceed 60% of your monthly income. This debt obligation includes not just your renovation loan, but also your home loan, car loan and other secured or unsecured loans.
Yes, it is possible to take a personal loan instead of a renovation loan for your home renovation. A personal loan is an unsecured loan offered by a financial institution. The cash borrowed through a personal loan is disbursed into your account and how you use this cash is completely up to you. This means that you can use this cash to pay for your renovation plus other furnishings and fittings. Similar to a renovation loan, you repay the bank monthly until the end of the loan tenure. However, most personal loans have higher interest rates compared to the interest rates offered for renovation loans.
Renovation loans have interest rates that are calculated based on the outstanding balance of the loan. As you repay your outstanding loan amount every month, the repayment amount and interest paid also reduces over time.
Personal loans, on the other hand, use flat rate calculation. Interest payments are calculated based on the original loan amount. This means that the monthly interest stays the same throughout the entire loan tenure, even though your outstanding loan amount reduces over time.
Besides paying the interest rate incurred on the loan amount, other fees involved include:
When applying for a renovation loan, documents you will require include:
You can get a renovation loan from any bank that offers it. Alternatively, you can use a comparison site like SingSaver to compare different renovation loans from different providers. On SingSaver, you can compare based on the interest rate, processing fee, monthly repayment, loan amount, repayment period or by specific providers.
You can choose a renovation loan based on factors such as:
You can also read this article on the best renovation loans in Singapore 2020.
You can follow these steps to apply for a renovation loan:
Step 1: Check if you qualify for a renovation loan
Step 2: Get a quotation from your contractor
Step 3: Choose your preferred loan
Step 4: Prepare the necessary documents
Step 5: Apply for the loan on the bank’s website or through SingSaver