How Much Renovation Loan Can I Get In Singapore?
19/1/23
7 minutes read
By: Joey Chong
Renovating your home is a terrific way to get what you want your abode to look, whether you need more space for a growing family or you just don’t like the style or feel of it.
Anyone who has ever undergone a home renovation will tell you that the process is thrilling but far from simple. Renovations often come with hefty price tags.
If you’re wondering how much renovation loan can I get, fixing up your home doesn’t have to cost you a fortune.
Read our guide below to find out how to go about it.
How Do Renovation Loans Work In Singapore?
The interest rates for home improvement loans are often lower than those for individual loans.
If you get a renovation loan, you should expect to make regular monthly payments for one to five years. You can get a renovation loan from banks or licensed money lenders.
For banks, the authorised loan amount will be delivered immediately to the renovation contractors in the form of a cashier’s order or numerous cashier’s orders to prevent you from misusing the renovation loan.
After a renovation loan has been dispersed, an inspector may go to the property to ensure the money was used for the intended renovations.
Licensed money lenders disburse the money in a lump sum to you, not to any vendor or contractor. Some may also allow you take a renovation loan for furniture, but banks won’t.
What Can Renovation Loans Be Used To Pay For?
While banks restrict what these loans can be used for, the list of uses is extensive and generally covers the major works required.
A renovation loan can be used to pay for anything linked to permanent changes in the home, such as:
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- Tiling and flooring
- Painting and decorating projects
- Carpentry
- Electrical and wiring installations
- Standard bathroom fixtures
- Structural modifications
- External works within your home’s compound, such as the balcony
- Solar panel installations
What Should You Look Out For In A Renovation Loan?
Are you ready to apply for a renovation loan now that you understand what it is and how it works?
If the answer is “yes”, it is critical to consider the five items listed below.
1. Interest Rates On Promotion
Whether it is a personal, vehicle financing, or reno loan, it is critical to keep the cost of credit in mind when looking for a loan. The objective should be to find the loan with the lowest interest rate.
The wonderful thing about renovation loans in Singapore is that banks periodically provide promotional interest rates, which you should take advantage of.
Some of the best examples are OCBC Bank and DBS Bank, which offer low interest rates to homeowners who want to make their homes more environmentally friendly.
So you may want to consider adding solar panels or green roofing as these lenders will likely support the renovation loan at a lower cost.
2. Fees For Loan Processing
In addition to the principal loan interest, paying close attention to the processing charge is critical.
Some lenders charge up to a 1.5% processing fee, which can be significant depending on the amount borrowed.
If you borrow $15,000 with a 1% processing charge to renovate your home, the loan will cost $150 to process. Look for a lender who does not charge a processing fee wherever possible.
3. Personal Credit Rating
As previously stated, a renovation loan is an unsecured form of finance. As a result, lenders base interest rates mostly on your credit score.
If your credit score is low, your renovation loan will undoubtedly have exorbitant interest rates. Before applying for a loan, you should thoroughly inspect your credit report to verify all is in order.
Obtaining your credit report from Credit Bureau Singapore and correcting any inaccuracies is a smart move. Pay off your existing bills and maintain a healthy credit mix to improve your credit score.
4. How Much Will The Lender Offer?
Some renovation projects such as extensions can be costly. As a result, if you want to conduct such expensive work, research the maximum that various lenders are ready to grant.
The maximum renovation loan amount in Singapore is six times your monthly income. Furthermore, most lenders want a minimum of $24,000 to qualify for a renovation loan.
Remember that while looking at the maximum loan amount lenders are willing to release, you should consider what you can comfortably repay.
Consider other debts you may have, such as personal loans, credit card debt, and student loans, and make sure they do not exceed 55% of your income, the current limit for the Total Debt Servicing Ratio (TDSR).
How Much Do Home Renovations Cost?
How much you borrow, the interest rate and any fees will determine your overall cost for a loan to make repairs or improvements to your home.
Your credit score and income or expenses will play a role in determining the loan amount and interest rate given to you.
For example, the cost of renovating a four-room flat in Singapore ranges from $41,000 to $66,000, excluding furniture. Depending on your priorities, you can accomplish a lot for less.
Do yourself a favour and hire a contractor or interior designer you can rely on or who provides excellent after-sales support – these traits will naturally command a higher price.
How Much Renovation Loan Can I Get?
Several considerations, including the type of renovation loan sought, the estimated value of the renovated property, the outstanding debt on the existing mortgage, and your creditworthiness, all matter when it comes to the question how much renovation loan can I get.
The maximum amount is six times your monthly wage, or $30,000, whichever is lower. So if you can only get $30,000 but need $40,000, you would be $10,000 short.
Hence, it is crucial to do your sums beforehand and have a ballpark figure to avoid such shortfalls. Remember to take your TDSR into consideration.
Best Renovation Loans In Singapore
Choose a loan repayment plan that works with your budget to prevent incurring late fees.
In addition, after the loan has been disbursed, the bank may conduct on-site inspections to verify that the money was used for the planned renovations.
Below is a summary of the renovation loans* currently offered by banks:
CIMB Renovation Loan i-Financing
- Annual interest rate: 4% EIR, 4.67% per annum
- Processing fees: $300
- Monthly repayment: $886
DBS Green Renovation Loan
- Annual interest rate: 3.88 % EIR, 4.62% per annum
- Processing fees: $300
- Monthly repayment: $884
OCBC Renovation Loan
- Annual interest rate: 4.18% EIR, 5.19% per annum
- Processing fees: $150
- Monthly repayment: $888
Citi Quick Cash – New Loan Customers
- Annual interest rate: 3.45% EIR, 6.5% per annum
- Processing fee: 0%
- Monthly repayment: $920
Standard Chartered CashOne Personal Loan
- Annual interest rate: 3.48 % EIR, 7.99% per annum
- Processing fees: $0
- Monthly repayment: $920
DBS Renovation Loan
- Annual interest rate: 4.18% EIR, 4.91% per annum
- Processing fees: $300
- Monthly repayment: $888
Citi Quick Cash – New Loan Customers
- Annual interest rate: 3.45% EIR, 6.5% per annum
- Processing fees: $0
- Monthly repayment: $920
*Information correct at time of publication
Know The Renovation Amount You Can Get Today
How much renovation loan can I get? This is certainly an important question.
If you need to complete home renovations, employing renovation loans is the wise way. As discussed above, the loans are solely available to homeowners and have low interest rates.
But only borrow what you can reasonably repay and stick to the agreed-upon payback schedule.
Remember that if you do not qualify for a renovation loan with a bank, you can get one from a licensed money lender like BST Credit, which offers more flexibility, no hidden fees and quicker processing time.
Contact us now or apply for a renovation loan now.
Joey Chong
Joey loves asking questions about why things work the way they do. This trait has served her well. During her decade-long career as a media strategist, she discovered she had a knack for writing and design and continues to employ that to her advantage. She loves watching horror movies on Netflix.
19/1/23
7 minutes read
By: Joey Chong
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