How Does A Renovation Loan Work In Singapore?

Renovation loans are a great way to spruce up your home without worrying about the cost. However, it is important to understand how does renovation loan work in Singapore before taking one. This article will provide an overview of the process and the requirements for a renovation loan in Singapore. You can make an informed decision about whether or not it is the right type of loan for you.

What Is A Renovation Loan?

A renovation loan is a type of loan that allows borrowers to finance the cost of remodelling or repairing a home. Borrowers typically use a renovation loan to purchase a fixer-upper or to make improvements to an existing home. The loan amount is based on the home’s value after the renovations have been completed. Borrowers can also use a renovation loan to refinance their current home and use the proceeds to finance the remodelling project.

Unlike personal loans, renovation loans often have more favourable interest rates and longer repayment terms, spanning from 1 to 5 years. This allows you to spread out the cost of the renovation over a longer period, making it more manageable. Additionally, you will be required to make monthly payments until the loan is fully paid off.

How Much Renovation Loan Can You Get

Typically, the maximum amount you can borrow is six times your monthly salary, or $30,000, whichever is lower. However, before applying for a loan, it’s crucial to understand the total cost of your renovation project clearly. This will help you avoid borrowing more than you need and enable you to budget effectively. It’s also a good idea to compare the loan terms of different banks, as they may have different lending criteria.

How Does Renovation Loan Work?

Upon approval of your renovation loan application, the approved funds will be distributed to the contractors as a cashier’s order.

After disbursement, the lender may conduct site visits to ensure that the loan is used for the specific renovation works outlined in the quotation. This process helps to ensure that the loan is being used for its intended purpose and that the renovations are progressing as planned.

What You Need To Know About Renovation Loans In Singapore

When considering a renovation loan in Singapore, there are several important factors to keep in mind:

Promotional Interest Rate

The interest rate on a renovation loan is typically lower than that of a personal loan, but it can vary depending on the lender and the applicant’s credit score. To save money on your renovation loan, consider comparing different options and taking advantage of promotional interest rates offered by banks. DBS/POSB and OCBC have recently begun offering lower rates for those who commit to making their home more energy-efficient and sustainable.

Loan Quantum

It is critical to determine the exact amount needed to fund your renovation project, but it is also important to know the maximum amount you can borrow. A minimum annual salary of $24,000 is also required to qualify for a renovation loan.

Fees Involved

When considering a renovation loan, it is important to be aware of any potential fees that may apply. These can include

  • Processing/Handling Fee: 1% of the loan amount authorised
  • Late payment fee: $80
  • Early repayment fee: Typically 1% to 2% of the total loan balance
  • Cancellation fee: 1% of the cancelled loan amount

When determining the specifics of your renovation loan, such as the loan tenure, loan amount, and ability to repay the loan, it is important to keep these fees in mind.


Different loan providers have different terms and conditions, interest rates, fees, and qualification requirements. It’s important to research and compare different loan providers to find the best loan for your needs and financial situation.

The financial institution’s reputation is also worth considering, especially when dealing with moneylenders. Find one more lenient with eligibility that will give you leeway or even provide assistance when monthly repayment gets too heavy. Additionally, it’s important to ensure that the provider is licensed, regulated, and has a good reputation for customer service.

Length Of Loan Repayment

Renovation loans typically have a repayment period of 1-5 years. This allows you to spread the renovation cost over a longer period and make the monthly payments more manageable.

How To Apply For A Renovation Loan In Singapore

To apply for a renovation loan in Singapore, you will need to follow these steps:

Check Your Eligibility

Before applying for a renovation loan in Singapore, you must check if you qualify. To be eligible for a renovation facility, you must:

  • Be the property owner and the primary applicant. This means you must be the legal owner of the property you wish to renovate.
  • Be a Singaporean citizen or permanent resident between the ages of 21 and 55.
  • If you have a joint applicant, they must be family-related and be employed.
  • You should have a minimum income of $24,000 per year and have a good credit score.

It is important to check if you meet these criteria before applying for a renovation loan. It can increase your chances of getting approved and make the process smoother.

Request A Quotation

After checking that you meet the eligibility criteria for a renovation loan in Singapore, the next step in the application process is to request a quotation from a renovation contractor. This is an important step as the renovation project’s cost will be a major factor in determining the amount of the loan you will need to apply for.

Once you have received a quotation, you can use it to determine the total cost of the renovation project and apply for a loan to cover these costs. With a detailed quotation, you can now proceed to the next step of the renovation loan application process: choosing a lender.

Choosing A Lender

When choosing a loan for a renovation loan in Singapore, it is important to compare the various interest rates offered, such as flat rate interest rate and monthly rest interest rate.

A flat rate is a fixed interest rate determined using the principal loan. At first glance, flat rates might seem more cost-effective, but if you can make regular payments or even pay the loan in full, your effective interest rate with a monthly rest package will be cheaper.

On the other hand, the monthly rest interest rate is calculated based on the outstanding loan amount at the end of each month. This is a preferable option for people who find it difficult to pay the loan fully upfront or who wish to reduce their overall interest costs gradually.

Check Your Documents

When applying for a renovation loan, certain documents are required to be submitted. These include

  • Your NRIC,
  • The latest IRAS Notice of Assessment
  • Your latest payslips for the last three months or a 12-month CPF contribution history statement.
  • Additionally, an original quotation from the contractor, signed by both the applicant and the contractor, is also necessary.
  • You will need to provide proof of ownership of the property that is being renovated,
  • Proof of any relationship between the Principal and Joint applicant if the loan application is being made jointly.

Apply For The Loan

When applying for a loan, ensure you meet all the requirements and submit the necessary documents to your chosen lender either online or in person. Once the loan is approved, you will receive a confirmation letter. However, it is important to note that the loan funds’ disbursement for renovations is made directly to the contractor’s account and not for personal use.

What Can You Use A Renovation Loan For?

Renovation loans can be used to fund the various aspects of your remodelling project, such as:

Flooring And Tiling

A renovation loan can cover replacing or installing new floors and tiling. This can include the cost of the materials (e.g. tiles, flooring, grout, adhesive, etc.) and any labour costs associated with the installation. This loan can also be used to repair existing flooring, such as replacing broken tiles, replacing damaged grout, and sealing gaps.

Painting And Redecorating Works

A renovation loan could cover all costs associated with painting and decorating work.This includes the cost of labour for painting and redecorating and the cost of the supplies (paint, brushes, rollers, etc.). It can also be utilised to pay for additional supplies or services, including wallpaper or speciality finishes.

Built-in Cabinets, Carpentry Works

These loans can be used to pay for the materials and labour associated with the installation. This includes wood, screws, nails and other necessary items to complete the project, as well as the cost of hiring professional carpenters to complete the work.

Electrical And Wiring Works

You can pay for the materials (electrical wires, switches, sockets, etc.) and the labour associated with installing  any electrical and wiring works. You can use the loan to repair existing electrical wiring, such as replacing faulty wiring or switches.

Basic Bathroom Fittings

A renovation loan can help with the costs of basic bathroom fittings, such as taps, showerheads, toilet fittings, and other bathroom accessories. This includes the cost of the materials (fittings, hoses, etc.) and any labour associated with the installation.

External Works Within The Compounds Of Your House

These loans cover the costs of materials and labour associated with external works, such as landscaping, fencing, paving, etc. This includes the cost of the materials (gravel, stones, wood, etc.) and any labour associated with the installation. It can also pay for additional supplies or services, such as a professional landscaper.

Get The Best Renovation Loan

Renovation loans are a great way to finance your home renovation project in Singapore. They offer low-interest rates and flexible repayment plans and can be secured with your property’s collateral. By understanding how does renovation loan work, you can ensure that you get the best deal for your home renovation project.

Are you in need of a renovation loan to spruce up your home? Look no further than Horison Credit. With our easy application process, you can get the funds you need in no time. Don’t wait any longer. Apply for a renovation loan with us today and make your home the best.


How Much HDB Loan Can I Get: Navigating Singapore’s Property Finance


What Is A Tuition Fee Loan And How Does It Work In Singapore?

Don’t wait – apply for a loan now.