Thinking about renovating your HDB flat but worried about the costs? In 2024, a 3-room BTO renovation can cost between S$34,200 and S$52,100, with 5-room flats reaching up to S$70,000. With rising costs, having a solid financing plan is essential, and renovation loans offer an attractive solution for homeowners.
While your HDB loan doesn’t cover renovations, a renovation loan allows you to borrow up to S$30,000 or six times your monthly income. This can provide the funds you need to turn your flat into your dream home.
In this guide, learn the key details of HDB renovation loans, from loan amounts to eco-friendly options, and how they compare to personal loans.
What is an HDB Renovation Loan?
An HDB renovation loan is specifically designed to help homeowners finance essential renovation works in their HDB flats. Unlike personal loans, which offer flexibility in terms of usage, HDB renovation loans are restricted to necessary home improvements such as:
- Structural alterations
- Flooring
- Painting
- Electrical works
- Built-in furniture
This makes them ideal for homeowners looking to improve their property while keeping their renovation budget focused on structural and functional enhancements.
Can You Use Your CPF Savings for Renovation?
CPF savings cannot be used for renovation, improvement, or repair works. According to CPF Board guidelines, these funds are reserved for property purchases, meaning you will need to rely on cash savings or renovation loans to finance your home renovation projects. This makes an HDB renovation loan an essential option for many homeowners.
Key Features of HDB Renovation Loans
When considering an HDB renovation loan, it’s essential to understand the key features and how they impact your overall renovation budget and repayment plans.
Loan Amount
You can borrow up to S$30,000 or 6 times your monthly income, whichever is lower. This cap ensures that the loan is used specifically for renovation work without overextending your finances.
Interest Rates
Interest rates typically range from 4.08% to 5.88% per annum, with Effective Interest Rates (EIR) slightly higher due to additional fees like processing fees. Some banks, such as DBS, also offer eco-friendly renovation loans with slightly lower interest rates, like the DBS Eco-Aware Loan at 5.68% p.a..
Loan Tenure
Loan tenures typically range from 1 to 5 years, allowing flexibility in repayment plans. Homeowners can select a tenure that fits their budget and financial goals, keeping in mind that a longer tenure results in paying more interest over time.
Fees
Renovation loans come with several associated fees, which are important to factor into your budgeting:
- Processing Fee: Usually between 1% to 2% of the approved loan amount.
- Insurance Fee: Typically 1% of the loan, this covers your outstanding renovation loan balance in case of death or permanent disability.
- Cashier’s Order Fees: The first cashier’s order is usually free, but subsequent ones may incur a fee of S$5 per order.
- Early Repayment Fee: Charged if you repay the loan before the end of the tenure, usually 1% to 2% of the outstanding amount.
- Cancellation Fee: If you cancel the loan after approval, you may be charged 1% to 2% of the principal.
- Late Payment Fee: If your payments are overdue, expect fees ranging from S$35 to S$60 per month.
Eligibility Requirements
Before applying for an HDB renovation loan, it’s essential to ensure you meet the basic eligibility criteria. This section outlines the necessary requirements and options for joint or third-party applications.
Basic Criteria
To be eligible for an HDB renovation loan, applicants must meet the following basic criteria:
- Minimum Age: 21 years old.
- Citizenship: You must be a Singapore Citizen or Permanent Resident.
- Minimum Income: The minimum income requirement is typically S$24,000 per annum for single applicants (Banking Financial Produ…).
Joint Applications
Joint applications are an excellent way to increase your eligibility for a higher loan amount. Many banks allow joint applications with a spouse, parent, child, or sibling. For example, Maybank requires joint applicants to have a combined annual income of at least S$48,000, with the main applicant earning at least S$30,000.
Joint applications can raise your loan eligibility to 12 times the lower income between both applicants, up to the maximum loan amount of S$30,000.
Third-Party Applicants
Some banks also allow third-party applications, where the homeowner is not the applicant. For instance, Maybank permits a third-party applicant, such as a parent or sibling, to apply for the loan as long as they meet the bank’s income requirements and are related to the property owner.
What Can You Use the Loan For?
An HDB renovation loan is designed to cover essential renovation works to improve your home’s functionality and structure. Here’s what you can use the loan for:
- Structural Works: Alterations like adding partitions or upgrading your flooring are covered.
- Electrical and Wiring Work: Installing new lighting, upgrading power points, or wiring for your entire home.
- Plumbing: From installing new sinks to upgrading bathroom or kitchen plumbing systems.
- Built-in Furniture: Custom cabinets and built-in wardrobes are part of the renovation loan’s coverage.
- Painting: Both interior and exterior painting work are included.
- Air-Conditioning & Heating Installations: You can also finance the installation of air-conditioning units and heating systems with your loan.
What’s Not Covered
Renovation loans do not cover non-permanent items, such as:
- Standalone Furniture: Sofas, dining tables, and other movable pieces.
- Appliances: Items like refrigerators, washing machines, and microwaves. For these, a personal loan would be a better option since it has fewer restrictions on how the money is used.
Steps to Apply for an HDB Renovation Loan
Applying for an HDB renovation loan is a straightforward process, but it involves a few key steps to ensure smooth approval and disbursement of funds. Here’s a step-by-step guide to help you navigate the process:
1. Get a Contractor’s Quotation
Before applying for the loan, you need to obtain an official quotation from your chosen contractor. This should outline the renovation works to be carried out, which will be required by the bank when submitting your loan application.
How to find a legitimate contractor + list of best contractors in Singapore
To start, you should be scrupulous in checking a company’s references before you hire them and avoid being taken in by deals that are too good to be true.
If you want a contractor, one of the first things you need to do is check if they’re on the HDB vendor list. If you prefer an interior designer, some of the requirements are listed in the CaseTrust guidebook.
To avoid unpleasant surprises, you should only hire a renovation contractor listed under the Registered Renovation Contractors’ Scheme (RRCS).
There are also restrictions related to other types of work on your flat, such as plumbing or window installation. You can find information about HDB licensed workers on their website.
If you engage a design firm that is CaseTrust-accredited, then you can rest easy knowing that your money is safe. If the company collapses before the work is complete, your deposit will be protected.
2. Submit Required Documents
Along with the contractor’s quotation, you will need to provide the following documents:
- NRIC: Proof of identity.
- Proof of Income: This could be your recent payslips or CPF contributions. Some banks may also require income tax statements, especially for self-employed applicants.
- Property Ownership Proof: If you’re not the homeowner, but a related family member, this may be required.
3. Accept the Loan Offer
Once your application is processed and approved, the bank will present a loan offer. Review the terms carefully, including the loan amount, interest rate, and repayment tenure. Once you’re satisfied, you can accept the offer to proceed.
4. How the Funds Are Disbursed
The loan amount will not be transferred to your account. Instead, it is disbursed via Cashier’s Orders directly to your appointed contractor(s). This ensures the loan is used specifically for the renovation works outlined in the quotation.
Renovation Loan vs. Personal Loan
When deciding between a renovation loan and a personal loan, it’s important to consider your specific needs. A renovation loan offers lower interest rates and is ideal for covering structural changes and built-in furniture, while a personal loan provides more flexibility for purchasing items like furniture and appliances, though it comes with higher interest rates.
Here’s a quick comparison to help you choose the best option.
| Feature | Renovation Loan | Personal Loan |
| Interest Rate | Lower (e.g., from 4.08% p.a. to 5.88% p.a.) | Higher (typically 6% to 10% p.a.) |
| Usage Restrictions | Restricted to approved renovation works only | Flexible; can be used for anything (furniture, appliances, etc.) |
| Loan Amount | Up to S$30,000 or 6x your monthly income | Up to 4x monthly income |
| Loan Tenure | 1 to 5 years | 1 to 7 years |
| Disbursement Method | Cashier’s Orders paid directly to contractors | Cash disbursed into your bank account |
| Processing Fees | 1% to 2% of the loan amount | Varies, usually higher than renovation loans |
| Best for | Structural renovations, built-in furniture | Buying non-permanent items like standalone furniture or appliances |
Bank-Specific Renovation Loan Packages
Each bank provides different interest rates, loan tenures, and eligibility criteria, which can significantly impact the cost of your renovation project. Below, we outline some of the most popular bank-specific renovation loan packages to help you make an informed decision.
| Best Renovation Loans | Interest Rate | EIR | Loan Amount | Loan Tenure | Processing Fee |
| DBS Renovation Loan | 5.88% p.a. | 6.95% p.a. | Up to S$30,000 or 6x monthly income | Up to 5 years | 2% of the approved loan amount |
| DBS Eco-Aware Loan | 5.68% p.a. | 6.75% p.a. | Up to S$30,000 or 6x monthly income | Up to 5 years | 2% of the approved loan amount |
| Maybank Renovation Loan | From 4.08% p.a. (for existing home loan customers) | Varies (based on profile) | Up to S$30,000 or 6x monthly income | Up to 5 years | 2% of the approved loan amount |
DBS Renovation Loan
DBS offers two main renovation loan options: the standard DBS Renovation Loan and the Eco-Aware Renovation Loan. The Eco-Aware Loan caters to homeowners aiming for a sustainable renovation, offering slightly lower interest rates for eco-friendly projects.
Both loans are designed to cover a wide range of renovation works, including structural alterations, built-in furniture, and essential fittings.
- Interest Rate:
-
- DBS Renovation Loan: 5.88% p.a.
- DBS Eco-Aware Loan: 5.68% p.a. (for green renovations)
- Effective Interest Rate (EIR):
-
- DBS Renovation Loan: 6.95%
- DBS Eco-Aware Loan: 6.75%.
- Loan Tenure: Up to 5 years for both loan types.
- Loan Amount: Borrow up to S$30,000 or 6x your monthly income, whichever is lower.
- Processing Fee: A 2% processing fee applies to the approved loan amount.
Maybank Renovation Loan
The Maybank Renovation Loan is among the most conventional renovation loan you can get. It comes with surprisingly attractive low-interest rates of 4.08% and a grace period of two working days before the bank decides whether to reject your application.
In addition to its standard renovation loan, Maybank also offers a Green Home Loan, which rewards eco-friendly renovations with sustainable practices.
This can be an excellent option for those looking to reduce their environmental impact while renovating their homes.
- Interest Rate: From 4.08% p.a. (for existing home loan customers)
- Effective Interest Rate (EIR): Varies depending on customer profile and loan conditions.
- Loan Tenure: Up to 5 years
- Loan Amount: Borrow up to S$30,000 or 6x your monthly income, whichever is lower
- Processing Fee: A 2% processing fee applies to the approved loan amount
Alternative to Bank Renovation Loans: Licensed Moneylenders
If you need financial assistance for home renovation, licensed moneylenders offer personal loans with flexible terms. Unlike banks, moneylenders have more relaxed requirements, making it easier to secure the funds you need.
You can borrow up to 6 times your monthly income with interest rates ranging from 1% to 4% per month. These loans are payable within 1 year, and no credit score is required for approval.
Plus, you can often get same-day approval, allowing you to access the funds quickly for your renovation project.
Frequently Asked Questions (FAQs)
1. Can I apply for a renovation loan if I am not the homeowner?
Yes, you can apply for a renovation loan even if you are not the direct homeowner, depending on the bank’s policies. Some banks, like Maybank, allow third-party applicants, such as close family members (e.g., parents or siblings), to apply for the loan if they meet the eligibility criteria. However, at least one applicant must be closely related to the homeowner and connected to the property being renovated.
2. What happens if I repay the loan early?
If you decide to repay your renovation loan before the end of the tenure, most banks charge an early repayment fee, typically ranging from 1% to 2% of the outstanding loan amount. It’s advisable to check the specific terms with your bank to understand the exact costs associated with early repayment.
3. What is the maximum loan tenure?
The maximum loan tenure for renovation loans typically ranges from 1 to 5 years, depending on the bank and the loan agreement. A longer tenure means lower monthly payments but results in paying more interest over time.
Conclusion
Choosing the right home renovation loan is essential to ensuring your home renovation fits both your budget and financial goals. Understanding each option’s benefits and limitations will help you make a smart decision. With the right loan, you can transform your space efficiently while staying financially comfortable.
Key Takeaways:
- HDB renovation loans cover structural changes, flooring, and built-in furniture, with loans up to S$30,000 or six times your monthly income.
- Moneylenders offer personal loans up to six times your income, with 1% to 4% monthly interest and same-day approval, ideal for urgent renovation needs.
- Bank renovation loans offer up to 5-year terms with lower interest, while moneylenders provide faster repayment within 1 year.
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