Renovation Loan Singapore [2022]

How To Get A Renovation Loan in Singapore

Renovation loan Singapore are loans that are meant for renovation purposes. A renovation could be for your home or a commercial property. While a home renovation loan is considered to be a personal loan, the interest rate for a home renovation loan is usually lower than an actual personal loan.

We reckon that it is because banks feel a little more secure when they know that you own a property asset, which increases the probability of you repaying the loan.

However, there are certain restrictions that come with the low renovation loan interest rates. Unlike a business loan in Singapore, where you have full discretion of how to use the funds, there are restrictions for how to use the renovation loan. Renovation loans are usually disbursed directly to either your interior designer or contractor.

A typical renovation loan in Singapore will have a repayment period of up to 5 years. The maximum amount that you can borrow will be up to six times of your monthly income or S$30,000, whichever is lower. You will also be able to choose between two interest rate options — flat rate or monthly rest option. The flat rate remains the same throughout the loan tenure, and the monthly rest changes from month to month. While the monthly rest interest rates tend to remain lower than a fixed rate, there are periods that where it can go significantly higher.

Before taking up an offer from any of the banks or financial institutions, be sure to find out about all the hidden fees involved, such as the application or processing fees which will usually amount to about 1% of the loan amount.

If the loan has to be disbursed in stages or to multiple vendors, the banks can sometimes charge an additional fee, which can sometimes be negotiated to be waived.

If you own or have set up business in a retail space, you would know that more often than not, the initial stage of setting up and ensuring that the space is beautiful and attractive is a big hurdle that has to be solved.

So very often, retail store owners need a renovation for their spaces, but the problem is, renovations are an expensive affair; and without sufficient spare cash, it becomes difficult to make the upfront deposits that contractors want.

The solution? Get a renovation loan! In this article, we will compare the the best renovation loan interest rates for you.

What Can A Renovation Loan Be Used For?

A renovation loan will allow you to finance most types of renovations, from creating a larger wardrobe to giving your kitchen a complete makeover.

Here is a list of renovation works that a renovation loan can typically be used for:

  • A face-lift in the outlay and design
  • Structural repairs
  • Re-modelling of the commercial space
  • Electrical and wiring works
  • Built-in cabinets
  • Basic bathroom fittings
  • Flooring and tiling
  • Painting and redecorating works
  • Structural alterations

Renovation loans in Singapore do not cover the purchase of furniture and appliances. A good way to pay for those would be take up the interest-free installment plans that are offered by many furniture stores these days.

Renovations are usually either paid in progressive payments or upfront in full. Point is, renovations in Singapore require for owners to have sufficient cash on hand. It often feels like a competition between raising sufficient funds, and the interior designer collaborating with the contractor to use up your budget

While there are alternative ways to fund the cost of your renovations, like utilizing your credit cards – though at the cost of 24% APR, the more logical solution would be to simply obtain a reno loan, where the cost of funding averages at an affordable range of 3 – 5% APR.

Get Funded Today To Grow Your Business!

Best Renovation Loan Interest Rates in Singapore

Bank Interest Rates
HSBC
3.2% p.a.
Citibank
3.45% p.a.
Stan Chart
3.48% p.a.
DBS
3.88% p.a.
Maybank
4.1% p.a.
OCBC
4.18% p.a.
CIMB
4.2% p.a.

The table shows and compares the 7 best renovation loans for you in descending order.

How To Qualify For A Renovation Loan?

To qualify for a renovation loan, you must meet the following criteria:

  • You must be a Singapore citizen/PR
  • You must be between 21 – 65 years old
  • Main applicant must have a minimum annual income of S$24,000
  • Joint applicant must be employed
  • Joint applicant must be a spouse, child, parent or sibling of the main applicant
  • Either the main or joint applicant must be the owner of the property to be renovated

Here is a list of guidelines to will help to better your chances:

  • Maintain healthy balances in your corporate bank account
  • Ensure that your company’s financial statements are properly done up
  • Have a minimum declared income of $30,000 annually
  • Have a good personal credit rating

Now, when it comes to renovation loans, banks tend to be a little more stringent with their assessments. Therefore, even in the event of a rejected application, do not lose hope. Try appealing, and if that fails, find out what went wrong, and try applying again in 3 – 6 months.

Features

Below are the features of a renovation loan:

  • Maximum loan amount: Up to 6 times of your monthly income or S$30,000 (whichever is lower)
  • Repayment Period: Up to 5 years
  • Interest Rate: Between 3% – 4.2% per annum

Required Documents for Application

Here is a list of the required documents that you will need to apply for a renovation loan sg:

  • Copy of your NRIC
  • Latest 2 years of Income Tax statements
  • Quotation from your contractor or interior designer
  • Title deed of property or any proof of ownership of property
  • Proof of relationship between main and joint applicants (i.e., marriage certificate or birth certificate)
  • Proof of billing (i.e., phone bill or utility bill)

Tips To Reduce Your Renovation Costs

We all know that renovations in Singapore can be very costly. For new home owners, this cost will come on top of the huge amount that you are already paying for your home.

Here are some tips to help make the costs of your renovations a little more affordable:

1. Get your renovation loan from the bank that you got your home loan

We all know that renovations in Singapore can be very costly. For new home owners, this cost will come on top of the huge amount that you are already paying for your home.

Here are some tips to help make the costs of your renovations a little more affordable:

2. Complete your renovations in stages

A good way to reduce your total renovation cost would be to carry out your renovation plans in stages. This way, you can reduce the total loan amount that you need to take up as well. Try by compartmentalizing the areas to renovate, and then proceed to renovate according to the designated compartments.

After each section is complete, you can then take your time to decide on subsequent renovations. As a rule of thumbs, try to start with the biggest and commonly used areas of your property.

Given that this method would delay your renovation plans by a fair bit. But the ultimate savings at the end of the day could be very well worth it. In fact, you even get to create more time for yourself to make better renovation plans.

3. Improvise whatever you can

For certain aspects of your renovation works, such as the installation of a new kitchen cabinet, or even a new wardrobe, there are cheaper alternatives.

For example, instead of getting your contractor to customize your kitchen cabinet, you could get a ready-made cabinet from a store like Ikea that just needs to be fitted into your kitchen area.

Try shopping around. For all you know, the ready-made options in a store like Ikea could prove to be a better option that a fully customized one.

General FAQ

Can I use CPF to pay for renovation loan?

No, you cannot use your CPF to pay for renovation loan.

Can I take a personal loan for home renovation?

Yes, you can. Generally, a renovation loan is similar to a personal loan as both are unsecured loans. It is best to pick whichever has the lowest interest rates.

What can be included in renovation loan?

A renovation loan will allow you to finance the cost of your renovations, from creating a larger wardrobe to giving your kitchen a complete makeover. do not cover the purchase of furniture and appliances.

Is renovation loan considered secured loan?

No, a renovation loan is an unsecured loan that has a repayment period of up to 5 years.