You may have gotten your dream home, but that doesn’t mean it’s already perfect. You may want to make some changes and repairs to fulfill your vision, but you might not have enough savings or budget to do so after spending much of what you had on a home loan. It might be time to consider getting a renovation loan.
Singapore has some of the best renovations loans available in the market, and it will help ease anyone looking to improve their homes. Working with any financial institution is bound to give you bang for your buck when facilitating new home renovations outside of home loans.
But if it’s your first time considering a renovation loan, it’s important to be prepared. In this article, we’ll talk about renovation loans, your options for financial products, and everything you’ll have to consider when making changes to your home.
What are home renovation loans?
Renovation loans are financing used to cover renovation costs and can address much of the changes you’ll want to make. They have a lot of purposes. You can use them for painting walls, adding new floorings and tiles, installing or fixing electrical wirings, expanding spaces, changing your roofing, and more.
You have a lot of different financial products to choose from to cover a chunk of the total cost of your renovations, and they can be divided into three specific categories.
Bank Renovation Loan
Bank renovation loans are those that you would apply for in banks. This is often a popular option simply because of security and consumer loyalty, as customers who took home loans from a specific bank will be more inclined to get a renovation loan from the same bank.
Bank Personal Loan
Personal loans are also an available option in place of renovation loans. Personal loan requirements are less strict, and their flexibility makes them ideal for financing renovations, especially for those that are normally not covered by renovation loans.
Personal Loan from Licensed Moneylenders
Banks aren’t the only place you can get a personal loan. Licensed moneylenders recognized by the Monetary Authority of Singapore also offer secure personal loans. These are often are more lenient in requirements compared to that of a bank.
Renovation Loan vs Personal Loan
Renovation loans, as is suggested by their namesake, are used specifically for making changes to a home. This is not to be confused with housing loans/home loans, whose purpose is to purchase/refinance a home.
A property owner getting a renovation loan may be limited in what they can do with the loan proceeds, unlike when getting personal loans.
Personal loans offer freedom of choice, as an approved loan amount can be used at your discretion. Moreover, you can get approved and receive the funds near-instantly if you need funding at short notice–even the best renovation loans can take a while to get approved.
The Best Renovation Loans
Covering the total cost of home renovation might be unlikely, but great renovation loans can offer a multitude of advantages that can be made available to you. Here are a few financial products to check out.
- Standard Chartered CashOne
- Maybank Renovation Loan Monthly Rest
- RHB Renovation Loan Monthly Rest
- OCBC Renovation Loan Monthly Rest
- CIMB Renovation-i Financing
- DBS/POSB Renovation Loan
The following figures are calculated based on a 20,000 loan amount on a 5-year loan tenure
| Renovation Loan | Processing Fee | Admin Fee | Interest Rate | Monthly Payment |
|---|---|---|---|---|
| Maybank Renovation Loan | 1.00% | 0% | 4.10% | S$369.23 |
| DBS/POSB Renovation Loan | 1.00% | 0% | 3.88% | S$275 |
| OCBC Renovation Loan Monthly Rest | 0% | 0.50% | 4.18% | S$369.96 |
| CIMB Renovation-i Loan | 1.00% | 0% | 4.20% | S$279 |
| RHB Renovation Loan Monthly Rest | 1.00% | 0.50% | 4.18% | S$370.14 |
| Standard Chartered CashOne | 0% | 0% | 3.48% | S$391.33 |
Note: other fees such as the early repayment fee, insurance premium, late payment fee, cancellation fee are not included under the columns for admin and processing fees.
1. Standard Chartered CashOne
- As a personal loan, getting an approved loan status can be as fast as 15 minutes.
- Borrow up to 4x your monthly salary, subject to a max loan amount of S$250,000.
- Customised rates may differ from listed amounts, and will depend on your monthly income, total debt servicing ratio, and other factors that can affect your loan amount, interest rate, and other terms.
- Enjoy 0% interest rates for 1-year loan tenure, with 4.5% processing fees to be deducted from the total disbursed loan.
- You may be subject to a late payment fee of S$80, and S$150 or 3% of the outstanding loan amount as a partial or full prepayment penalty.
2. Maybank Renovation Loan Monthly Rest
- Ideal for longer loan tenures, up to 5 years.
- The interest rates are ideal for its tenure.
- You borrow up to 6x your monthly income or S$30,000 whichever is lower.
- You are charged no disbursement fee for your first loan, and an amount of S$5 for each subsequent loan from this financial institution.
- Despite having no processing fee, you are charged an admin fee, cancellation fee, and full and partial repayment all each at 1% of the approved loan amount, with S$80 for late loan repayments
3. RHB Renovation Loan Monthly Rest
- Existing home loan customers for renovation can get an additional furnishing loan
- You can get 6x your monthly salary and a 5-year tenure
- You get free disbursement for your first order and S$10 for subsequent ones.
- You can only get a cashier’s order a maximum of three times.
- Processing fee and cancellation fee are at 1%, late payment charge is 5% above Prime Lending Rate on overdue monthly instalment, partial repayment is at 2% on the prepaid amount, and full repayment is at 2% on the outstanding balance.
4. OCBC Renovation Loan Monthly Rest
- Offers third-party borrowing while other banks do not.
- The home renovation loan amount can be disbursed as soon as after one working day.
- Up to 3 free disbursements, S$20 for subsequent renovation loans
- Cancellation and partial and full repayment penalties are all 2% of the approved loan amount, 1% on insurance premiums, and S$80 for late monthly instalment payments.
5. CIMB Renovation-i Financing
- Good as a short-term renovation loan
- You can borrow loans of up to 6x your monthly salary or S$30,000 whichever is lower.
- Up to 3 free orders, subsequent ones are S$20, with a cancellation of order charged S$20.
- Processing fees, cancellation fees, and full repayment are at 1% of the approved loan, while late monthly repayment is at S$80.
6. DBS/POSB Renovation Loan
- Has low-interest rates compared to its peers, as well as generally lower fees.
- Processing fee, insurance, cancellation, and pre-payment are all at 1% of the approved loan amount.
- The first order is free, while subsequent ones have S$5 disbursement.
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Alternative: Licensed Moneylenders
Licensed moneylenders also offer loans that can help cover home renovation. While they do not offer renovation loans, personal loans are all the easier to apply for compared to other banks.
The approved loan amount may fluctuate depending on your eligibility.
How to Choose the Best Loan for Home Renovations
When taking any kind of loan, it’s important to consider the different factors that can affect you financially. Take the following into consideration when making an application.
Interest Rate (and your Monthly Income)
The interest rate determines how much you’ll have to spend on monthly repayment. Consider getting a renovation loan with an interest rate that does not compromise your finances.
It’s also worth factoring in the total cost of the loan, by factoring in the entire loan tenure in addition to the interest rates.
Maximum Loan Amount
Renovation is a big spend, and as such, you should make sure you’re getting an amount that can cover what you need. When shopping around, factor in the maximum and minimum loan quantum of your chosen financier.
Fees and Charges
Most fees are avoidable with prompt monthly repayment, but some of them come with the loan package like the processing fee. They are an extra expense that comes out of your pocket, so it’s important to factor them as you would the interest rates.
Provider
It’s also worth considering the reputation of the financial institution, especially when dealing with moneylenders. Find one that is more lenient with eligibility and will give you leeway or even provide assistance when monthly repayment gets too heavy.
Current Promotions
Promos are a great way to save on expenses! Before going forward with a renovation loan, make sure to keep an eye out for existing promotions that you can take advantage of for additional savings.
How much should I budget for my renovation project?
As is with any large expense, you are going to need an estimate for how much you should set aside. There are, however, many variables to consider that may affect the amount, such as:
- Type and size of the home. What are you renovating? Is it an HDB flat, condo, or landed house? Does it already come with any existing fittings? How big is it?
- Its current condition. Older homes may demand more renovations for upkeep. Keep an eye on how old the building is and note possible problems that may come with age.
- Amount of work to be done. How satisfied are you with its current state? Do you want to just add finishing, personalised touches, or build it from the ground-up?
- Materials. Naturally, aspiring for more than the cosmopolitan choices may incur bigger expenses. If you want exotic woods and marble flooring, prepare more cash.
- The contractor/designer. Pricing will vary depending on who you work with.
Case study of a 4-Bedroom HDB Flat
The Singaporean government provides housing for citizens. Housing is available for purchase or rent in the public and private sectors.
The average costs associated with renovating a 4-room flat is between $43,000-$45,000, while a resale on can cost around $45,000- $52,000 for a 4-room unit.
Living and Dining Rooms
Living room and dining spaces are the most public areas of any house, usually making these rooms the largest parts of a home.
Despite that, these rooms actually cost less money to renovate compared to other spaces in a home. The costs are as follows:
| Component | Light | Moderate | Extensive |
|---|---|---|---|
| Hacking | $100 to $400 | $400 to $700 | $700 to $3,900 |
| Masonry | $100 to $1,300 | $1,300 to $3,000 | $3,000 to $22,000 |
| Carpentry | $200 to $3,400 | $3,400 to $6,100 | $6,100 to $23,700 |
| Ceiling & partition | $200 to $800 | $800 to $1,200 | $1,200 to $3,200 |
Bedrooms
Bedrooms are often smaller. However, they are intimate and very personal, and as such may result in a substantial amount of renovation. The estimated costs of renovating a bedroom are as follows:
| Component | Light | Moderate | Extensive |
|---|---|---|---|
| Hacking | $100 to $600 | $600 to $1,000 | $1,000 to $5,200 |
| Masonry | $200 to $1,300 | $1,300 to $2,800 | $2,800 to $8,800 |
| Carpentry | $200 to $4,400 | $4,400 to $7,500 | $7,500 to $33,700 |
| Ceiling & partition | Up to $600 | $600 to $1,100 | $1,100 to $5,000 |
Kitchens
Kitchen renovations usually focus on improving functionality and aesthetics, not expansion. This room will usually connect with your dining and living areas. so it’s important to take note of their functions before renovation.
Despite the smaller size, the functional nature of kitchens demands more renovation costs.
| Component | Light | Moderate | Extensive |
|---|---|---|---|
| Hacking | $100 to $500 | $500 to $900 | $900 to $3,200 |
| Masonry | $200 to $1,300 | $1,300 to $3,900 | $3,900 to $11,300 |
| Carpentry | $100 to $4,300 | $4,300 to $6,900 | $6,900 to $17,900 |
| Ceiling & partition | $100 to $200 | $200 to $500 | $500 to $1,700 |
Bathrooms
Bathrooms tend to incur considerable costs considering the many functional amounts you can add. This can include basic bathroom fittings, tiling/retiling, plumbing installations, and more.
The renovation costs for a bathroom are:
| Renovation Component | Light | Moderate | Extensive |
|---|---|---|---|
| Hacking | $100 to $500 | $500 to $1,000 | $1,000 to $6,800 |
| Masonry | $100 to $1,500 | $1,500 to $5,700 | $5,700 to $17,500 |
| Carpentry | $200 to $1,200 | $1,200 to $2,100 | $2,100 to $9,000 |
| Ceiling & partition | $100 to $400 | $400 to $800 | $800 to $3,900 |
Other Expenses
Don’t forget to account for all the expenses you’ll incur during this renovation:
| Renovation Component | Light | Moderate | Extensive |
|---|---|---|---|
| Electrical wiring | $300 to $1,700 | $1,700 to $3,200 | $3,200 to $7,700 |
| Painting | $200 to $1,400 | $1,400 to $1,800 | $1,800 to $4,100 |
| Windows, doors & grilles | $400 to $2,600 | $2,600 to $5,100 | $5,100 to $13,800 |
| Disposal & cleanup | $300 to $1,100 | $1,100 to $1,700 | $1,700 to $13,900 |
How can I save on the renovation cost?
There’s always something you’re going to want to change, and that means more to spend. If you can’t cut down on the stated renovation works, there are always other ways you can reduce the overall cost.
Here are a few to consider:
- Use a mix of affordable and premium materials. Not everything has to be top of the line. Find ways to reduce the cost of materials by mixing and matching affordable items with premium ones (if you have to have the premium materials). It’s all in the design, and seamless integration can make affordable options look just as good.
- Choose your contractor carefully. Shop around for the people you’ll hire to remodel your home. Depending on who you choose, there can be a considerable cost.
- Have due diligence in understanding. Study the renovation guidelines thoroughly and follow them to the letter. Any mistakes will only incur further expenses. See the HDB guidelines here.
- Choose a loan type that fits your needs like a glove. The rule of thumb is always not too low and not too much. Your chosen loan can greatly affect your expenses. Take a careful look at the processing fee, interest rates, and the overall cost of the loan.
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The Bottomline
- Renovations can end up really expensive, so make sure to be practical with your choices.
- When taking out a renovation loan while still paying off a home loan, make sure to carefully calculate your monthly expenses to ensure not falling into debt.
- Consult experts to find out what ideal changes you can make within your budget.
When considering a home renovation loan, it’s important to find a loan that suits your needs. Consider a personal loan from A1 Credit.
It is a money lending service in Singapore that makes applying for personal loans easy, with flexible terms to help you get the money you need with less stress. Quickly finalize your application online and receive your offer via email within hours.
