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Quick Guide: How Home Renovation Loan in Singapore Work?

Why do many use a home renovation loan Singapore? Is it vital to achieve the new look you wish for your home?  

Renovations can be a great way to upgrade your home’s functionality and looks, but they can also be overpriced. Many Singapore homeowners want to make necessary improvements, but their finances hinder them. Fortunately, a renovation loan can solve this problem, but it is essential to understand how it works.

A renovation loan Singapore is specifically designed to cover the costs of refurbishing a home. You can obtain these loans through various financial institutions, such as banks and registered moneylenders. You can use the reno loan cash to pay for materials, labour, and other expenses related to the renovation project.

One of the essential perks of a renovation loan is that it allows you to make necessary changes to your property without paying for them upfront. This is especially advantageous if you do not have much savings or want to make immediate changes but do not have the cash on hand. 

If you’re interested in applying for the best renovation loan Singapore, you might as well learn more about how it works and other vital details. 

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How Do Home Renovation Loans Work?

In Singapore, home renovation loans are like personal loans but differ in their focus. Reno loans let you borrow money and pay it back over a set time with interest. However, your spending is only meant to cover home improvement costs. You can use it for electrical, tiling, painting, and labour costs. It is the best loan product for such an expensive project. 

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A renovation loan Singapore has its limitations. You can only use it to pay for actual renovation work and nothing else. You cannot use them to procure brand-new furniture or home appliances. If you wish to purchase new items for your revamped home, you must use other means. You can utilise your savings or credit card instalment plans.

In addition, a renovation loan in Singapore has borrowing limits. If you’re solely taking out a reno loan, you can have to six times your monthly income. For example, if your monthly income is S$5,000, you can borrow up to S$30,000.

 Furthermore, you can increase the loanable amount if you use joint borrowing. When applying with a spouse, parent, or sibling, you can borrow up to 12 times the lower monthly income between the two of you. For example, if your monthly paycheck is S$4,000 and your spouse’s is S$3,000, you can borrow up to 12 times S$3,000.

Regardless of your monthly income level, the maximum amount is capped at S$30,000 per renovation loan. Even if you and your spouse have high incomes, the loan can be S$30,000.

Factors Affecting Cost of Home Renovation Loan Singapore

You need proper preparation when you find your house needing repair or maintenance. You can’t simply just talk to a contractor and request their service. Also, you can’t demand a renovation loan without correctly quoting the refurbishing expense. Always remember these features before approaching any assistance. 

Home Renovation Cost

Home Type

The types of homes in Singapore vary widely, and so does the cost of revamping. 

ECs (Executive Condos). Renovation costs are usually lower because ECs have built-in kitchens, toilets, and wardrobes.

Resale Flats typically require a higher renovation budget due to more extensive hacking and dismantling. There are additional costs if you need to rework piping and plan new layouts. 

BTO Flats (Built-to-Order) have lower renovation costs as they come with basic fittings like toilet bowls and sinks. Thus, it reduces initial renovation needs.

Landed Properties require significant renovation funds due to their larger size and potential for extensive customisation. Costs vary greatly depending on the work scope, such as structural changes and landscaping.

Understanding these differences helps you plan and budget for renovations. Whether it’s an EC, condo, resale flat, or landed property, each type has its renovation considerations and potential costs.

Renovation Type

A renovation loan Singapore funds home improvement projects for various reasons. The loan amount you need depends on your refurbishment purpose. If you plan any of these, your reno loan can cover the expenses. 

Home Improvement Projects. The funds can be spent on roof fixing, painting walls, electrical upgrades, installing flooring, and repairing plumbing.

Enhance Living Spaces. Homeowners can upgrade and maintain their homes to be more comfortable and functional. 

Increase Property Value. Improvements can raise the home’s market value. Revamping your home can lead to a higher resale price if you plan to resale your house.

A renovation loan Singapore is a practical solution for enhancing your living spaces without significant upfront costs. However, the expenses it entails vary based on your renovation goal. 

Professional Assistance

When renovating your home, you need help from the experts. This way, you can ensure that any changes made in your home are safe, secure, and legal. Often, Singaporeans are torn between interior designers and contractors, affecting renovation costs. 

Interior Designers are more expensive. You use their time and expertise to manage your renovation project comprehensively. They handle everything from planning and sourcing materials to overseeing construction and furnishing your home. IDs act as a bridge between you, contractors, and suppliers. They are your go-to aid if you need help with every aspect, from initial ideas to final touches. These are professionals managing the entire refurbishing process.

Contractors focus more on executing renovations based on your designs. They execute plans without the added management and design fees. You pay suppliers directly, which can save costs. You will contact services and shops independently since you don’t need the designer’s full-service approach. If you already have clear revamping plans and want to save on costs, contact contractors instead. 

Deciding between an interior designer and a contractor depends on your budget and how much guidance you need throughout the renovation process. Choosing which one can help you achieve your home renovation goals efficiently and within your financial means.

When Should I Get A Renovation Loan Singapore?

Applying for the best renovation loan is for home maintenance and repairs only. But what kinds of repairs does it include? 

Disintegrating Roof

Repairing a crumbling roof is crucial for safety and preventing damage to your home’s interior. A renovation loan Singapore can cover the expenses. It includes costs for replacing damaged shingles and installing a completely new roof. This way, your home stays safe and energy-efficient.

disintegrating roof for renovation loan singapore

Refreshing Paint

Painting and redecorating can rejuvenate your home’s appearance but can also be expensive. If you wish to change the entire colour scheme of your house, you need massive funding. A reno loan can cover costs like paint, wallpaper, and other materials. Thus, enhancing your home’s value is beneficial if you intend to sell it later.

Electrical Update

Electrical and wiring issues can be troublesome for homeowners. They can lead to power disruptions, safety risks, and appliance damage, which is risky for the house, family, and finances. A renovation loan Singapore can fund upgrades to your electrical system. For example, you can install new wiring, outlets, and light fixtures. This way, you can sleep peacefully at night in a more reliable home environment.

Restore Floorings

Replacing worn-out flooring is essential for both safety and aesthetics. A home renovation loan can cover the costs if your floors are in bad shape. You can replace the damaged floorboards or even install entirely new flooring. If you can refurbish your floor tiles, your home remains safe and visually appealing at the same time.

Replace Water System

A damaged plumbing system can lead to leaks, clogs, and even flooding in your home. Before any danger happens, get it fixed immediately. However, such repairs can damage your wallet. A renovation loan Singapore can help cover repairing damaged pipes, fixtures, and other plumbing components. It keeps your home safe and dry but can also lower water bills.

The best renovation loan Singapore is a valuable tool for homeowners to finish the work without breaking the bank account. 

Reno Loan vs Personal Loan in Singapore

Renovation loans and personal loans are both ways to finance home renovations, but they have essential differences.

personal loan vs renovation loan singapore

Interest Rate

Reno loans have lower interest rates, typically around 3 to 4% per annum. The interest calculation is based on your outstanding loan balance. As you repay, the interest you pay each month decreases based on what’s left to pay off. Meanwhile, personal loans have higher interest rates compared to renovation loans. Calculating the interest is based on the original loan amount. It means your monthly interest payments remain unchanged throughout the loan term, regardless of how much you’ve repaid.

Loanable Amount

A renovation loan Singapore allows borrowing up to 6 times your monthly income. If you tried joint reno loan applications, you could have up to 12 times. However, the loan limit is capped at S$30,000 per loan. Meanwhile, personal loans allow borrowing up to 4 times the monthly income for most earners. For higher-income homeowners earning S$120,000 or more annually, it could be up to 8 times.

Here is a sample scenario. A renovation loan is necessary if you earn S$5,000 monthly and need S$30,000 because a personal loan would only provide up to S$20,000. However, if you make S$8,000 monthly, personal and renovation loans can cover the S$30,000 needed.

Spending Purpose

While a renovation loan Singapore offers lower interest rates, you must consider the restrictions. You can only use the funds for renovation-related expenses like tilework, paintwork, and electrical wiring. It means you cannot use the loan for purchases such as furniture or curtains. With this, the cash disbursement is not for you. Instead, the money is directly paid to your contractor or interior designer. Thus ensuring it’s used solely for approved renovation purposes.

Personal loans are more versatile. You can spend the instant cash loan for any purpose. For example, you can purchase furniture, appliances like air-conditioners, or other personal expenses. That’s why quick cash disbursements are given to you directly. It can be in cash or sent to your bank account. Thus, it gives you complete control over how and where you spend the money.

Both personal loans and renovation loans are handy for revamping your home. However, you must understand the similarities and differences between them. The best renovation loan Singapore is ideal for lower-income earners needing enormous sums for renovation projects. Meanwhile, a personal loan offers flexibility in usage and application. It suits those with higher incomes looking for a broader financial solution.

How Will My Renovation Loan Get Approve Singapore?

When looking for the best renovation loan Singapore, you must meet the eligibility rules of reputable money lenders. If you want to fix up your house, ensure you can repay the money you borrowed with these features. 

property ownership for home renovation

Legal Age

Licensed money lenders usually have age requirements for reno loans. Although you must be a Singapore Citizen or Permanent Resident, foreigners with a working visa can still apply. Most of the time, you need to be at least 21 years old to apply. Some trusted lenders might also set a maximum age limit, often between 65 and 70 years old. 

You are eligible for a reno loan within this age range. These age limits help reputable moneylenders trust that you, as a borrower, can repay the renovation loan within an agreed-upon time frame.

Stable Income

Reno loan providers typically review the borrower’s income when deciding whether to approve a renovation loan. It includes looking at salary, rental income, or other sources of revenue. You must have a minimum income starting from S$24,000 per year. 

Borrowers with higher incomes and stable jobs are seen as less risky. You will likely be granted a renovation loan in Singapore if you belong to this group. It will positively impact your repayment ability. Banks and licensed moneylenders may have slightly different income requirements, but meeting these general criteria is essential.

Property Ownership

Legitimate money lenders and banks usually require borrowers to own a property in Singapore to qualify for a renovation loan. The property can be a private property, an HDB flat, or an executive condominium with a property deed.

The property itself serves as your collateral for the reno loan. It means you give the lender security that you will repay your loan diligently. Or else, if you default, you are willing to lose your property. Your trusted loan provider can use the property to recover the borrowed money. 

In addition, presenting proof of home ownership protects lenders and homeowners. It ensures that only legal homeowners can apply and be approved for a renovation loan in Singapore. Most importantly, it prevents fraud and illegal transactions. 

Healthy Credit Score

Your credit history and overall financial standing are also crucial for eligibility for a renovation loan in Singapore. Banks and moneylenders typically review borrowers’ credit scores to ensure a history of responsible borrowing. It includes their credit history, credit score, and credit utilisation ratio. 

If you have a better credit score and a good credit history are considered less risky. You are more likely to be approved for a loan with a healthy credit record. A good credit score shows that you have managed your debts excellently before. That’s why you are likely to repay the loan responsibly. 

In addition, a positive credit score helps you secure better interest rates. As a result, you could pay less interest over the life of the loan. Therefore, you can save more funds for future home repair and maintenance. 

Each bank and licensed money lender has its specific criteria. It is best to check directly with the trusted lender for the most accurate loan details. Always check if you can afford the monthly repayments before taking on a reno loan to avoid future financial stress. This way, you can manage your finances better and avoid difficulties paying back the loan.

What You Need To Apply For A Renovation Loan Singapore?

Understanding how a reno loan works and how many Singapore locals apply for it sounds enticing. It makes you want to plan your home refurbishing, too. You must do the following before sending in your interest to process a renovation loan. 

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Consider the Loan Amount

Banks and reputable moneylenders limit a renovation loan Singapore at S$30,000 per loan. It seems insufficient, especially if you plan to do extensive renovations. Also, this loan value might not suffice if your savings cannot cover the remaining costs. 

When you think of taking out a higher home reno loan amount, you can consider these: 

Joint Renovation Loan. Your spouse or co-occupant of the property can apply for another renovation loan to cover the shortfall. It can help you get the additional funds needed for your renovation project. Also, you have someone to share the repayment responsibility. 

Personal Loan. Alternatively, you can apply for a short-term personal loan in Singapore. It can increase your available funds and spend it on buying new appliances. Personal loans typically have higher borrowing limits of up to 12 times your monthly income. But be careful not to exceed your borrowing limits. 

Learn about the Fees

When choosing a renovation loan, be familiar with the fees and charges. These fees are often based on a percentage of the principal loan amount and can add up significantly. 

Processing Fee is a charge for processing your home reno loan application. It is usually a percentage (1%) of the loan amount.

Insurance Premium is a charge for insurance coverage on the renovation loan Singapore. It protects the legitimate money lender if you default.

Here is a sample calculation of the fees included in your home reno loan if you apply for a maximum of S$30,000. If the processing and insurance fees are 1%, they cost S$300 each.

S$300 (1% processing) + S$300 (1% insurance) = S$600 total

Sometimes, moneylenders charge a 1.25% processing fee. For example, if you take out a S$30,000 renovation loan, your cost would be S$375.

S$375 (1.25% processing) + S$300 (1% insurance) = S$675 total

As a result, several hundred dollars are deducted from your loan cash right from the start, reducing the instant funds allotted for your renovation. That’s why you must compare fees between renovation loan providers. This way, you can choose the best one with the lowest total costs.

Also, calculate the net loan amount to understand how much money you will receive after these fees are deducted. If you pay close attention to these charges, you can better manage your renovation loan. Most importantly, you can secure enough funds to complete your project.

Understand the Loan Tenure and Interest Rate

Like other loans, you must be attentive to the interest rate of a home renovation loan in Singapore. Remember that lenders often highlight the advertised rate, which gives a basic idea of the interest you will be charged. Meanwhile, the EIR gives you a clearer picture of the actual cost of borrowing. It includes the effects of compounding interest and any additional fees. Always check the EIR to understand the total cost of your loan.

Furthermore, the loan tenure is essential in computing your interest throughout the renovation loan. Typically, banks and moneylenders offer tenures of between one to five years. 

A shorter loan term means you have higher monthly repayments but less total interest paid over the life of the loan. On the other hand, the longer loan term means you have lower monthly repayments but more total interest paid. Your interest is charged and accumulated throughout the loan.

So, consider the interest accumulation when browsing for the best renovation loan packages. The longer the loan tenure, the more interest you will pay. Also, choose an affordable reno loan term that you can comfortably sustain in monthly repayments.

How To Apply For Renovation Loan Singapore?

Getting the best renovation loan Singapore is now more accessible and convenient. If you wish to secure a fast reno loan approval, follow these steps. 

Step 1. Get the Best Estimates

A home renovation project is expensive, but you’ll pay more if you don’t know how much the entire renovation will cost. To be more financially prepared, consider these: 

Get a Detailed Quotation. Work closely with your contractor to gather a complete quote that includes all the work needed for your renovation project.

Compare Costs and Loan Eligibility. Compare the total cost from the quotation with the maximum loan amount you’re eligible for. Depending on the money lender, this could be up to six times your monthly income in Singapore or S$30,000. This comparison helps you decide whether to get one reno loan for everything at once or multiple loans for different stages of your home improvements.

application for home renovation loan singapore

Step 2. Choose the Best Renovation Loan Provider.

Evaluate numerous home renovation loan Singapore packages thoroughly. Banks and trustworthy moneylenders market their reno loans through interest rates, extra fees, etc. Pay close attention to the following. 

Differentiate Interest Rates. Look at the interest rates offered by different banks and lenders. Some offer lower rates than others so that you can save money over time.

Check for Extra Fees. Be wary of additional charges can add up and affect your total loan cost. It can be the processing fees, early repayment penalties, and late payment fees. 

Understand Eligibility Requirements. Different legal money lenders have different requirements for reno loan approval. Make sure you meet the criteria for the loans you are considering.

Use Online Calculators. Many banks and licensed lenders offer calculators for a home renovation loan Singapore on their websites. It can help you estimate your monthly repayments based on your principal loan amount, interest rate, and repayment period.

Read Reviews and Gather Information. Read customer reviews and gather as much information as possible about each lender. It can give you insight into their customer service and reliability.

Step 3. Prepare Requirements

Collect the necessary documents to support your renovation loan application. Be prepared beforehand so you can hasten the loan application process. Typically, registered moneylenders require the following documents.

Proof of Identity. Your NRIC and passport are common identification used.

Latest Assessment Notice from IRAS. Your income tax assessment is from the Inland Revenue Authority of Singapore.

Income Proof. Your computerised payslips for the previous three months or CPF contribution statements covering the past 12 months.

Contractor’s Quotation. A signed, original quotation from your contractor, endorsed by both you and the contractor.

Proof of Property Ownership. Your property title deed or other legal proof that you own the property.

Joint Applicant Information. If applicable, a confirmation of your joint applicant’s salaried status, such as their payslips or CPF statements. Also, evidence of your relationship, such as a marriage certificate, is necessary. 

Step 4. Submit Application for Renovation Loan Singapore

Once you have compiled all the necessary documents, submit your home reno loan application. Today, you can apply through in-person submission and online submission. 

You must visit the bank’s or money lender’s office for an in-person application to process your renovation loan application. Meanwhile, an online application provides quick response times, often within an hour. Some licensed moneylenders offer a loan enquiry form you can complete in minutes. You can even get approved in just a few minutes.

However, it does not end there. Taking out a renovation loan Singapore requires you to do this. 

Meet with the Lender: Even if you apply online, you must personally meet with your trusted lender for a thorough review. A loan representative will check your documents during this interview and elaborate on the loan terms.

Clarify Doubts. Before signing the loan agreement, ask any questions you have. You may list your queries beforehand so you won’t forget to raise your concerns before sealing the deal. Understand the terms thoroughly before anything else. 

Step 5. Receive Home Reno Loan Cash 

After reviewing and signing the loan agreement, the loan funds will be disbursed to you. Sometimes, banks will ask you to return the next day. But most legal moneylending institutions release instant cash loans within the day. 

However, getting your renovation cash loan is not the end. You still must repay your reno loan as agreed. You can manage it wisely by doing these: 

Follow the Repayment Schedule. Remember the repayment due dates provided by the lender. Repayment often involves monthly payments, so you have ample time to replenish your funds. 

Set Up Reminders. Use calendar reminders or automatic payments. It is a strategic method that helps you avoid missing a payment and won’t incur penalty fees. 

Budget Wisely. Include your home reno loan repayments in your monthly budget. Prioritise your regular monthly obligations, but always remember your loan payments. 

Communicate with Your Lender. If ever the worst happens and you encounter another financial difficulty, contact your chosen lender immediately. Reputable moneylenders are considerate and versatile if you can’t make a payment on time. Lenders might offer solutions like restructuring your loan or providing a temporary payment break.

Keep Track of Your Payments. Regularly check your renovation loan statements and review if your payments are being applied correctly. Also, monitor your remaining balance so you are mentally and financially prepared for it. 

Get the best deal possible to maximise your renovation loan Singapore. Follow the steps above to receive a favourable decision for your preferred home renovation loan provider. 

Thrifty Tips: Reduce Costs of Renovation Loan Singapore

Revamping your home can be expensive, but there are ways to lower your costs. Consider these practical tips to save money for your home renovation loan Singapore.

pre-loved furniture

Forget Extravagance

Seeing the progress of your home renovation would encourage you to upgrade more. For instance, you might prefer luxurious items that fit your interior design. Or, level up the comfort that suits your newly repaired bedroom. 

Buying platform beds, customising furniture, or adding a walk-in closet can exceed your budget. Since they are unnecessary, you could skip them. If you dream of having them, you can add them later when saving more money.

Purchase Pre-Owned Furniture

Think about whether everything needs to be brand new. If family or friends give away furniture that looks good and well-conditioned, why not accept it? You could save you more than you can imagine.

In addition, you can shop for pre-loved furniture and other home items. You can visit thrift stores, flea markets, and legit online platforms. You might find fantastic bargains this way. Since unwanted furniture takes up space, sellers might offer meagre prices to remove it quickly. So grab the opportunity. 

Seek for Helping Hands

Do you need to transport your existing furniture to your newly renovated home? Is an extra workforce required to install a kitchen sink? Instead of paying for moving services or hiring professionals, ask family and friends who are willing to help you. 

Don’t force them to do repairs when you talk to your family or friends. Explain the task that needs assistance and check if they can help you accomplish it. This way, you can minimise your physical effort and avoid strain in your relationship. Most importantly, working with your loved ones saves money and makes the renovations more enjoyable.

The best renovation loan Singapore can supply your home repairs and maintenance finances. But you should rely on more than just it. If you can minimise your spending, that would be better. This way, you can maximise the instant cash loan for other valuable expenses. 

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Cash Mart: The Best Renovation Loan Singapore

Cash Mart is a legitimate moneylender in Singapore. It provides many loan offerings, such as payday loans, small business loans, and personal loans. These loan products come with the most attractive interest rates and loan tenure. 

As an unsecured personal loan provider, Cash Mart is one of the best renovation loans in Singapore. You can apply, get verified, and receive disbursed cash within a day. In addition, you can process your reno loan application without further credit checks. 

Also, Cash Mart offers flexibility. You can use the instant cash loan to make renovation-related purchases without restrictions. 

If you can verify your credibility and repay on time, you can get approved quickly. Visit the official website today!

Frequently Asked Questions About Home Renovation Loan Singapore

How much must you earn to apply for renovation loan Singapore?

To apply for a renovation loan Singapore, the principal borrower must have a minimum annual income of S$24,000, and a joint borrower must have at least S$12,000. Meanwhile, non-Singaporean applicants with a work permit must earn a minimum yearly income of S$60,000.

If you don’t earn this much, you can still get a personal loan from a licensed moneylender in Singapore. These reno loan providers requires no minimum income. If your earning is at least S$20,000 a year, you can get a personal loan up to 6 times your monthly income.

Can I apply renovation loan even bad credit?

Your credit score is crucial in deciding if you qualify for a renovation loan. A good credit score indicates that you’ve consistently paid off debts punctually. Typically, legal lenders require a credit score of at least 600 to approve a renovation loan.  

A bad credit can damage your chances of getting bank approval for a renovation loan Singapore. If this happens, you must fix your credit score before applying again. You could also go to another lender, like a licensed moneylender. 

Can non Singaporean do a renovation loan Singapore?

Many people think only Permanent Residents can apply for a home loan in Singapore, but that’s not true. While PRs have some advantages, non-residents can also apply for home loans.

You can take a home renovation loan Singapore as a foreigner by meeting the eligibility criteria. These usually include your stable income, job status, credit history, and current debts. Licensed money lenders assess these factors to decide if they can grant you a reno loan and how risky it is.

How much renovation loan can I get?

If you apply for a home renovation Singapore with a single status, you can borrow up to 6 times your monthly income. But if you apply with your spouse or a family member, you can borrow up to 12 times the lower income between you and your partner. Nevertheless, the most you can borrow for a home reno loan is 6 times your monthly income or S$30,000, whichever is lower.

Can aircon be in renovation loan Singapore?

A home reno loan does not cover furniture or appliance purchases. So, it won’t pay for your brand-new air conditioning unit or the fancy designer sofa you’ve been eyeing. If you wish to install another aircon, you can take out low-interest personal loans from registered money lenders. 

Can bad debts apply for renovation loan Singapore?

 A lower credit score decreases your chances of getting approved for a reno loan. Lenders see a poor credit score as a sign that you’re a high-risk borrower less likely to make timely payments. 

Sometimes, a renovation loan borrower with a lower credit score can still apply. However, it comes with high interest rates. Trusted moneylenders offer better terms to borrowers with better credit records than lousy credit borrowers.

How long does a home reno loan get approved?

Getting approved for a renovation loan Singapore usually takes five to seven business days. Banks must check your credit, verify your renovation quotes, and go through other steps.

To get your loan approved quickly, send in all the required documents with your application. Most importantly, evaluate if you meet all the eligibility requirements before you apply.

Can renovation loan be consolidated?

The Debt Consolidation Plan (DCP) does not include renovation loans, education loans, medical loans, credit facilities for businesses or business purposes, or debts under joint accounts. Recognising their purpose-specific or essential nature, the Monetary Authority of Singapore (MAS) has exempted these loans from industry-wide and individual financial institution borrowing limits.