Best Renovation Loans in Singapore (2023)

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:

• Flooring and tiling
• Painting and redecorating works
• Built-in cabinets, carpentry works
• Electrical and wiring works
• Basic bathroom fittings
• External works within the compounds of your house, such as the balcony, roof etc.

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:

• A Singapore Citizen or Singapore Permanent Resident
• Between 21 - 65 years old (maximum age limit differs across banks)
• Earning a minimum annual salary of S$24,000 (for joint applications, at least 1 applicant needs to earn this amount)
• The property owner, or a related family member who has the owner's consent (joint applicants must be related)

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:

• Processing/Handling Fee: 1% of approved loan amount
• Late payment fee: S$80
• Early repayment fee: Usually 1-2% of outstanding loan balance
• Cancellation fee: 1% on the loan amount cancelled

When applying for a renovation loan, documents you will require include:

• NRIC
• Latest IRAS Notice of Assessment
• Latest payslips for last 3 months; or last 12 months CPF contribution history statement
• Original quotation from contractor, duly signed by applicant(s) and contractor
• Proof of ownership of property to be renovated
• Proof of relationship between Principal and Joint applicant (for joint applications)

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:

• Interest rate
• Maximum loan amount
• Fees involved
• Provider
• Current promotions (if any)

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