How Exactly Does a Renovation Loan Work?
A renovation loan is a personal loan designed to help you keep up with home renovation costs. Interest rates of renovation loans tend to be lower than typical personal loans. However, the tenure limits are between one and five years.
Renovation Loan Types
You can apply for a renovation loan to help with a multitude of different home renovation plans. You have the option of a flat rate or a monthly rest rate. Monthly rates remain the same for the duration of the loan tenure while monthly rest rates go up or down.
Forms of renovation that can be covered by a renovation loan:
- • Electrical and Wiring Works
• Basic Bathroom Fittings
• Flooring
• Tiling
• Painting
• Structure Changes
• Built-In Furnishings
• External Home Renovations
Best Renovation Loans in Singapore (2021)
| Renovation Loan | Perks | |
|---|
| POSB Renovation Loan | Comprehensive coverage and benefits | Apply Now |
| OCBC Renovation Loan | Flexible repayment period | Apply Now |
| Maybank Renovation Loan | Large renovation loans | Apply Now |
| DBS Renovation Loan | Reasonable interest rates | Apply Now |
| CreditMaster Renovation Loan | Low interest rate | Apply Now |
How Do I Go About Applying for a Renovation Loan?
Follow these basic steps to prepare yourself for the application process:
- • Determine if you are eligible for a renovation loan
• Determine how much you can borrow based on your annual salary
• Get a quote from your chosen contractor
• Prepare the application document and other necessary documents
Am I Eligible for a Renovation Loan?
Check the following criteria to determine if you are eligible for a renovation loan:
- • You are a citizen or permanent resident between the ages of 21 and 65
• You or the main applicant are earning a minimum of $24,000 per year
• All other applicants are employed and directly related to you
• You or the main applicant must be the owner of the property you are renovating
Where can I Find the Best Renovation Loan in Singapore?
There is no singular best renovation loan. The best loan for you is determined by the type and cost of your renovation.
Each loan will come with a handling fee and a specific interest rate. Once you’ve determined the type of loan you need, choose the one with the lowest interest rate and extra fees.
Once you’ve compared all of these loaning companies and found the one with the best options for your specific situation, you will have found the best renovation loan in Singapore for you!
Keep Track of Your Budget
Renovation loans cover most home furnishing options. That being said, most renovation jobs cost quite a bit more than the renovation loan that you can acquire. Make sure to balance the spending of your loan with the amount of money you are making to pay off both the remaining renovation costs and your monthly repayments.
If necessary, limit your renovation plans to necessities and deal with your wants later.
Do Not Take Hiring Shortcuts
Hiring someone unprofessional and cheap to do home renovations is almost always a mistake. You’re better off taking things slowly with a professional to ensure that the job is successful. This may take longer but will significantly reduce your stress levels!
Research Before Applying
There’s more than one type of renovation loan. You need to determine which one applies to your situation before applying for anything. You should also research interest rates at various banks offering the type of loan that you need. These are the basic steps to take before applying for a renovation loan.
Consider How Long You Need the Tenure to Be
The longer you take to pay back your loan, the more it will cost. However, a longer tenure allows for smaller monthly repayments. You need to balance what you can afford to repay with the amount of time you can save.
If you try and pay it off quickly to save money, you may miss repayment dates, causing you to end up paying even more than if you just added an extra year. Try to leave some extra savings for emergency purposes whenever possible.
How Much Can I Borrow with a Renovation Loan?
The most you can loan at once is 6 times your annual salary to a maximum of $30,000. $30,000 is the limit, no matter how high your salary is.
What if I Can’t Borrow Enough?
If you’re renovating a house owned by you and others, you can each apply for a renovation loan. This means if there are four of you living together, you can borrow up to $120,000 altogether.
What Kind of Tenure Should I Expect?
Typically, tenures will range between one and five years. Some banks also offer free insurance against accidental death or permanent disability for the full loan tenure.
Should I Expect Any Other Fees?
There is a processing fee that will cover 1% or 2% of your loan.
What Documents Should I Prepare?
- • Double-sided photocopy of Your NRIC
• For paid employees, your latest e-statement or CPF contribution history from the past year.
• For the self-employed, two years of Income Tax Notice of Assessment
• Signed invoice from the contractor
• Property’s proof of ownership
• Completed application form
What’s The Lowest Renovation Loan Interest Rates?
The current market interest rates are between 2.8% to 6% per year.
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