One of the most common types of loans you can apply in Singapore is the renovation loan. As the name implies, these are loans that help you in paying for the cost of renovation and it helps especially after you are done with the purchasing process.

Why you need a renovation loan?

The reason is simple. You need a renovation loan in Singapore because it is an expensive affair. Buying your home might have cost you a lot of your savings. You might even have taken out a portion of your CPF as downpayment for your property. So, you would need additional funds to make up the house so that you can live in it as soon as you get the keys. This amount can range from SG$20,000 and can be as much as SG$200,000. Unless you have that amount in your savings, you would need additional help.

What’s the difference with other loans?

One thing for sure, home renovation loans in Singapore do not have the same criteria and features of the other types of loans.

• They have lower than the more common packages offered by most banks like personal loans.
• Home renovation loans have a shorter payback period, usually a maximum of 5 years.
• Generally, the loan amount is at most 6 times your monthly salary (with some having a cap of SG$30,000).

That said, what are the criteria to be eligible for a home renovation loan? You must:

• Be a Singaporean citizen or holds a permanent resident status
• Have a good credit score
• Have and is the owner of your own property
• Meet the minimum requirements in terms of income
• Use the loan for only renovation purposes that cover tiling, flooring, painting, electrical works and wiring, external compounds within your property, bathroom fittings and renovation.
• Which loan is best suited for you?

Do take note that HDB does not provide renovation loans (only housing). While you are allowed to use your CPF to finance your home, you are not allowed to use it for renovation. Hence, you will need to finance the renovation of your home with other possible means. When selecting your home renovation loan, there are certain factors that you must consider as most banks offer such packages. This includes:

• Finding the best interest rate – In this context, you might want to choose the lowest in the market. There are flat and floating interest rates available.
• Repayment terms – You might want to consider a shorter-term loan so that you pay this off as quickly as possible. However, you should take into consideration your ability to service the loan.
• Fees – Take note of any miscellaneous fees as you might need to pay for processing or disbursement. That could amount to 1% to 5% of the total amount.
• Discounts – If you take a home renovation from the same bank you took your home loan from, there might be discounts or rebates.

Below are some of the home renovation loans offered in Singapore.

• RHB Renovation Loan – Comes with a 4.18% interest rate and 1% processing fee.
• DBS Renovation Loan  – 3.88% interest rate and comes with a 1% processing fee.
• CIMB Renovation i Financing  – Comes with an interest rate of 4.33% with a 1% processing fee of the approved loan amount.
• OCBC Renovation Loan  – Interest rate of 4.18% with 0% processing fee.
• Maybank Renovation Loan – 0.75% processing fee and a 4.1% interest rate.