Most people who buy a house in Singapore opt for a mortgage loan. Given Singapore’s low interest rates, this is not surprising. But did you know that you can also get a loan for home renovations in Singapore?
After all, buying a house is a major life event, and many homeowners hope to renovate their desired property into their dream home. After purchasing a house, some may find themselves short on liquid funds when they come across their favorite renovation styles and ideas. Therefore, some people are willing to apply for a renovation loan.
Renovation loans have the lowest interest rates among all unsecured loans. Once you spend your savings on renovations, if you need money later, you’ll have to apply for a personal loan with an interest rate that can be up to double.
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Renovation Loan Amount and Loan Tenure
In Singapore, most banks offer renovation loan services. The interest rate for a renovation loan is much lower than for a personal loan, but the tenure is shorter, with a maximum of only 5 years. Generally, the maximum renovation loan amount you can get is 6 times your monthly salary, capped at S$30,000.
Renovation Loan Approval Criteria and Application Requirements
Each bank in Singapore has different approval criteria for loans. Some banks may focus on the borrower’s salary situation (whether it’s a fixed salary or variable income), while others might place more importance on the borrower’s profession and work experience. Some banks are concerned with whether the borrower is the family’s primary breadwinner. However, the ultimate goal for all banks is to determine the borrower’s repayment ability. Therefore, the loan amount is calculated based on multiple factors, including the borrower’s household income, Loan-to-Value (LTV) ratio, and Total Debt Servicing Ratio (TDSR).
There are quite a few requirements for applying for a renovation loan, and banks are particularly strict in their review process. The loan application must meet the bank’s lending requirements. Below are the basic conditions that must be met to apply for a renovation loan:
- Singapore citizen or Permanent Resident (PR) with a good credit score.
- Homeownership. A personal home renovation loan is a loan issued by a bank to a borrower for the renovation of their own home. This means the property being renovated must belong to you.
- However, many families in Singapore have multiple generations living in one home. As a result, some banks in Singapore are gradually relaxing this rule. For example, DBS Bank allows immediate family members to help apply for the loan, while OCBC Bank allows friends or even unrelated individuals to apply on behalf of the homeowner.
- Complete set of required loan documents. For a home renovation loan application, you must prepare the home renovation contract signed with a relevant government-approved renovation company, a detailed cost estimate, and other related documents.
- A 30% cash down payment for the renovation. Some individuals may only be able to borrow up to 70% of the total renovation cost. Some banks require homeowners to have at least 30% of the total renovation budget in their own funds and to invest this amount into the project before using the loan.
- The loan is paid directly to the renovation company. According to bank regulations, the borrower is generally not allowed to withdraw cash. The bank will issue the loan directly to the renovation company via cheque, usually in a maximum of three installments. This ensures the funds are used for their intended purpose, which can further guarantee the progress and quality of the renovation.
- The use of the loan is also restricted, with its main purposes including:
- Electrical work and wiring
- Tiling, flooring, and painting
- Basic bathroom fittings
- External renovations of the home
Comparison of Renovation Loan Packages from Major Banks
You can inquire and compare among various banks in Singapore to determine the best renovation loan package.
The quickest way to apply for a renovation loan in Singapore is to borrow from your home loan bank. This is because the same bank can often give you a discount on your renovation loan. In fact, many banks, including POSB and OCBC, will ask if you have an existing home loan before calculating your loan amount.
Below is a simple comparison of renovation loans offered by various banks in Singapore. All calculations are based on a loan amount of S$30,000 and a loan tenure of 3 years.
| Bank / Loan Package | Annual Interest Rate | Monthly Repayment Amount |
| CIMB Renovation i-Financing | 4.33% | S$890.13 |
| OCBC Eco-care Renovation Loan Monthly Rest | 3.98% | S$885.45 |
| OCBC Renovation Loan Monthly Rest | 4.18% | S$888.12 |
| Maybank Renovation Loan Monthly Rest | 4.10% | S$887.05 |
| DBS Green Renovation Loan | 3.88% | S$881.46 |
| DBS Renovation Loan | 3.68% | S$884.12 |
Additional Costs for Renovation Loans in Singapore
Considering that a renovation loan requires a 30% cash down payment, borrowers also need to be prepared for additional loan-related costs to avoid cash flow issues. The loan requires payment of several fees, such as a Disbursement Fee, a processing fee, and late payment fees (if applicable). The disbursement fee is typically 1% of the approved loan amount. If a late payment occurs, the borrower may need to be prepared to pay a late fee of about 5.7% of the loan amount.
Best Renovation Loans in Singapore: A Comparison
The following calculations are all based on a loan amount of S$30,000 and a loan tenure of 3 years.
CIMB Renovation i-Financing
| Loan Amount | S$30,000 loan amount, 3-year tenure |
| Annual Interest Rate | 4.33% |
| Monthly Repayment | $890.13 |
| Total Interest Paid | $2,044.68 |
| Processing Fee | 0% |
OCBC Eco-care Renovation Loan Monthly Rest
| Loan Amount | S$30,000 loan amount, 3-year tenure |
| Annual Interest Rate | 3.98% |
| Monthly Repayment | $885.45 |
| Total Interest Paid | $1,876.20 |
| Processing Fee | 0% (but a 0.50% admin fee on the loan amount is charged) |
OCBC Renovation Loan Monthly Rest
| Loan Amount | S$30,000 loan amount, 3-year tenure |
| Annual Interest Rate | 4.18% |
| Monthly Repayment | $888.12 |
| Total Interest Paid | $1,972.32 |
| Processing Fee | 0% (but a 0.50% admin fee on the loan amount is charged) |
Maybank Renovation Loan Monthly Rest
| Loan Amount | S$30,000 loan amount, 3-year tenure |
| Annual Interest Rate | 4.10% |
| Monthly Repayment | $887.05 |
| Total Interest Paid | $1,933.80 |
| Processing Fee | 1.0% of the approved loan amount |
DBS Green Renovation Loan
| Loan Amount | S$30,000 loan amount, 3-year tenure |
| Annual Interest Rate | 3.68% |
| Monthly Repayment | $881.46 |
| Total Interest Paid | $1,732.39 |
| Processing Fee | 1.0% of the approved loan amount |
DBS Renovation Loan
| Loan Amount | S$30,000 loan amount, 3-year tenure |
| Annual Interest Rate | 3.88% |
| Monthly Repayment | $884.12 |
| Total Interest Paid | $1,828.29 |
| Processing Fee | 1.0% of the approved loan amount |
From the examples above, we can see that choosing a renovation loan package requires comprehensive consideration. DBS can offer the package with the lowest interest rate and the smallest monthly installment. However, OCBC has the lowest processing fees in comparison.
Another thing to note is the discounts offered by banks. Beyond the figures listed above, we should also see if a bank’s discounts can help lower your repayment amount. Having more information can help you negotiate with the bank for a better deal.
Finally, be sure to choose the package that offers you the most value. You need to consider all your other loans, such as your education loan, home loan, and car loan. Try to keep your renovation loan repayment rate below 30% of your debt-to-income ratio.
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