How Does A Renovation Loan Work In Singapore?


It is common to renovate your newly-acquired apartment and make the space livable using customised plans.

However, limited cashflow could be why you postpone remodeling. Did you know you can get a home renovation loan to facilitate the maintenance costs?

So, how does renovation loan work in Singapore, and what do you need to get these funds? Read on for everything you must know when contemplating renovation loans.

What Is A Renovation Loan?

Renovation loans are funds you can borrow to remodel, repair, improve, or furnish a home.

The loan is unsecured and mainly covers maintenance costs and can be repaid in one year or up to five years but in monthly installments.

So how does renovation loan work and do lenders put restrictions on its usage?

After applying for a home improvement loan, a money lender will assess the entire maintenance project before approving the request.

The lender will then disburse the funds to a contractor, interior designer, supplier, or service provider in the form of a cashier’s order in a lump sum or installments.

Loan amounts vary, but you can get up to six times your annual salary – you could pay additional fees if the lender disburses the funds in installments.

Always check your home improvement loan agreement to avoid extra fees, especially if the money will be disbursed in installments.

The lender may conduct occasional site visits to confirm that the loan covers the renovation project as cited in the quotation.

Money lenders can reject renovation loan requests if you intend to use them for other purposes except for home improvement.

How does renovation loan work and how can you use these funds? You can cover the following costs:

Repair Damaged Roof

The roof might have leaks, be worn out, gapped, poorly done, have a broken ceiling, or not properly fixed. You can use renovation loans to fix these damages.

Restore Floors

An old home may have a damaged floor or could slowly be deteriorating.

Noticeable cracks, broken tiles, strains, and holes are something you should fix with a home improvement loan.

Repaint Walls

Removing dirt, faded areas, rust, or chemicals on your walls is possible through renovation.

You can prevent chipping and get an alluring look on the walls through repainting – a home improvement home can cover the costs.

Carry Out Expansions

Some apartments may be smaller, which necessitates extra space. You may consider including a garage, office space, or patios.

With a home improvement loan, you can easily improve the home’s interior and exterior to include a more customised space.


It is important to improve your home and give a better impression. For example, landscaping is one of the best ways to give your home a new look.

You may also want to install a fence or repair the existing one as you enhance the privacy of your home – a renovation loan comes in handy.

Remodel A Property

You may have acquired an old property, but improving its outlook increases its value.

Are the kitchen cabinets, rooms, and wardrobes appealing? If not, remodeling the rooms and areas can make it look better.

Consider remodeling the entire house if you are a realtor and home to sell the house at a higher price.

Fix Faulty Electrical System

Damaged electrical systems are a health hazard and could lead to costly damages, including malfunctioning your appliances. Thankfully, a renovation loan can cover such costs if you are short of money.

Repair Drainage or Plumbing Systems

Water blockages and leakages can be a nuisance and compromise hygienic standards.

You can work on your plumbing system using a home maintenance loan.

How Does Renovation Loan Work And What Should You Know?

Renovation loans are similar to other credit you could get from lenders in Singapore.

Familiarising yourself with the basics of renovation loansis critical in determining if you can take the funds.

So what are the considerations?

Loan Amounts

Loan quantum comes to play when borrowing, and varies depending on the project’s size and maintenance type.

For example, an old house with cracked floors and a crumbling roof may need higher loan amounts than one that needs painting.

A lender will also consider your income to determine loan amounts – your yearly income must be at least $24,000.

Interest Rates

Interest rates are a critical factor when considering renovation loans because it means more dollars to be paid in addition to the principal.

Banks may have favourable interest rates, especially when running promotions on home improvement loans.

You can take advantage of such waivers if you want to pay low interest rates.

Equally, other money lenders provide renovation loans at varied interest rates.

You can shop around and compare the rates provided by the lenders before choosing affordable ones.

Compare renovation loan interest rates before deciding on the perfect lender.

Additional Fees

In addition to interest rates, renovation loans attract mandatory fees, such as processing fees (usually 1% of the principal).

Late payment and early-payment penalties are also something you should discuss with the loan dealer before accessing the funds.

And if you change your mind about taking home improvement loans, you may pay a cancelation fee of approximately 1%.

Inquire about possible penalties and charges you must contend with while taking a renovation loan.

Loan Provider

Lenders may have various loans, but does it match your home maintenance needs?

You can research and compare various dealers before choosing your perfect lender.

If you took a home loan, you could discuss with the lender for a renovation loan to attract a favourable deal.

How To Apply For A Renovation Loan In Singapore

As you look into repairing your home in Singapore, the need for a renovation loan may be inevitable.

However, checking the eligibility criteria before applying will be best to increase approval chances. Lenders check the following aspects:

Property Ownership

You cannot qualify for a renovation loan unless you prove that you own the home you want to renovate – lenders will ask for proof of ownership.

Reside In Singapore

Money lenders only provide home improvement loans to Singaporeans aged 21 to 65.

Minimum Annual Income

Before getting a renovation loan, a lender will check if you meet the minimum annual requirements. For example, some dealers will require a minimum of $20,000, while some set a minimum limit of $30,000.

Good Credit

Renovation loans are unsecured – so lenders will assess your creditworthiness before approving loans.

You could get loans with bad credit scores but at higher interest rates. Work on your credit rating to attract friendly interest rates.

How do you apply for a renovation loan in Singapore? Follow these steps to receive funds:

Get A Quotation

You can estimate how much it will cost to renovate your home fully. But getting quotations from suppliers and service providers allows you to approximate how much the entire project will cost.

Therefore, consult vendors and experts depending on the complexity of your renovation project and request quotations.

Consult multiple vendors and compare the quotations to find quality but budget-friendly.

Shop For A Lender

It’s time to find the best lending institution. You can opt for the same lender who provided a home loan (if you got one).

Banks may be ideal, but eligibility could be stricter. Alternatively, choose licensed money lenders, such as BST Credit, for tailor-made loans.

When choosing a loan provider, you can compare interest rates, loan amounts, terms of service, and eligibility checkers.

Have The Right Documents

Lenders will check specific documents when approving loans. These include:

  • NRIC
  • An updated IRAS Assessment Notice
  • Latest pay slips (three months) or CPF contribution statements (at least the last 12 months)
  • A quotation from a contractor
  • Proof of property ownership
  • Joint applicants must prove that they are related.

Once you meet the above requirements, you can now fill out a loan application – you can do this at a physical store or online on the lender’s website.

The lender will scrutinize your application and send you a letter or an email to confirm loan approval.

The lender does not disburse funds into your account but into the service provider’s account.

To fully understand how does renovation loan work, know the following:

  • Interest rates – every lender decides interest rates depending on your creditworthiness, income, and loan amounts.
  • How soon can you get the funds? Some repairs need to be done in the shortest time possible. For example, you must prioritise repairing a home that is in poor condition, such as leakages and poor drainage. In this case, lenders with instant loans are ideal. Remember to specify the amount you need and the renovation project.
  • The loan tenure should be one you can adhere to without struggling financially. Longer loan terms allow you to repay smaller monthly installments but result in higher total payable amounts.
  • Loan affordability should be a primary consideration. Think about your ability to commit to repaying the loan monthly. Also, other debts might come to play when contemplating a renovation loan.

Find Out How Does Renovation Loan Work And Get Funds

Your home could be in poor condition, but there is a solution for you.

You can inquire about a home renovation loan from BST Credit and get money to help remodel, repair, and fix damaged areas.

Are you considering making improvements to your home and need more funds? Apply for a loan today and get funds in no time.

Ready to try BST Credit?

Apply Now