As the name suggests, renovation loans refer to those loans that are sanctioned for the up-gradation and modification of an existing property. After an immense search on the Internet, we have developed a comprehensive guide to provide you with an insight into various options for an in house renovation loan in Singapore.

Making the right upgrades to your home can increase its total resale value. However, as this is an exhaustive and capital-intensive project, it demands borrowers to take loans. In short, it is an ideal solution if you wish to fix something like your roof, kitchen, bathroom, etc.

In Singapore, apartment renovations usually tend to range from $10,000 to $100,000 depending upon the task under consideration. The interest rate of a renovation loan in Singapore can vary.

Due to this reason, many certified money lenders and banks in Singapore offer their customers unique renovation loan programs that help them to achieve their dream home.

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What Is The Main Purpose of A In House Renovation Loan In Singapore?

Before we delve deeper into the various programs for an in house renovation loan in Singapore, it is essential to understand the primary purpose of a renovation loan.

As mentioned above, a renovation loan is used for modification purposes only. In other words, individuals cannot use this loan to pay their home loan or mortgage or buy new furniture or appliances.

Some of the things you can do with the renovation loan include wall painting, external additions such as fences or roofs, bathroom renovations, carpentry, or even electrical jobs.

Benefits of In House Renovation Loan In Singapore

Renovation loans, especially those in Singapore, allow individuals to borrow more money, as it is based on the expected value of modification for their home. In addition, they had been allowed to restore the charm of their old home rather than buying a new home altogether.

Moreover, home renovation loans tend to have lower interests, which leads to a decreased expenditure for the user. Lastly, a renovation loan has a larger tax deduction, as individuals are usually the first to take up the mortgage, cost, and interest.

Drawbacks of Renovation Loans

Even though there are numerous benefits of in house renovation loans in Singapore, these types of loans tend to have potential risks that an individual needs to be aware of.

The first drawback of a renovation loan is that not all banks and money lenders offer these loans. In other words, there are a few limited banks that have special in house renovation loan programs. As a result, an individual's choices are confined to a shortlisted number of lenders.

Furthermore, renovation loans required more preparation. This is because an individual has to prove to the moneylender or bank that once the renovation is completed, the home will have high value to justify the overall cost and expenditure of the renovation.

Lastly, it takes longer to become eligible for a in house renovation loan, as multiple people are involved in the approval process. In addition, renovation loans tend to demand a contractor, which increases the approval process than a traditional mortgage approval.

Differences Between Personal Loans and In House Renovation Loans

Many individuals often confuse the benefits of personal loans with in house renovation loans. However, it is important to note that there is a slight difference between the two.

A personal loan is a type of loan that individuals borrow to satisfy personal needs and requirements.

However, a renovation loan is a facility availed solely to modify and upgrade an individual’s home.

When compared to renovation loans, personal loans tend to have greater flexibility as they can be used for a wide variety of purposes such as pensive purchases, education, and much more.

Furthermore, the interest rate for renovation loans tends to start from below 3% per annum, unlike personal loans, starting from 4% end below per annum.

In addition to the above command, both types of loans tend to differ in terms of eligibility.

For a personal loan, an individual must be between 21 to 65 (61) years old and have a minimum income of ca. $20,000 per annum. On the other side, renovation loans demand an individual to be a legal homeowner.

Eligibility of Renovation Loans in Singapore

To be eligible for an in house renovation loan Singapore, they need to satisfy specific criteria. The primary purpose of such criteria is to showcase their property ownership to banks and money lenders.

  • Firstly, an individual must be 21 or older and either a permanent resident or a Singaporean to avail of a in house renovation loan. In addition, they must be the sole owner of the property that is under consideration for renovation.
  • Last but not least, to be eligible for an in house renovation loan in Singapore, the individual must fall within the minimum income threshold.

You should note that individuals must show key documentation to banks and money lenders to obtain the most suitable in house renovation loan for their needs and requirements. These include their monthly income sheets, their past loan documents, etc.

Documentation Required For A Renovation Loan In Singapore

If you are on the hunt for an in house renovation loan Singapore, you need to have a few documents to help you apply for it.

The documents that are required for the lending process include your identity card or NRIC, proof of residences such as rental agreement, SingPass, an invoice from your renovation vendor, verification of employment, and a copy of the OTP (Option to Purchase) of the home you are renovating.

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Factors To Consider When Choosing An In-house Renovation Loan in Singapore

Renovation loans in Singapore tend to differ in terms of interest rates and income requirements. Thus, it is recommended to think about a few crucial animals when selecting the best renovation loan in Singapore for you.

Below are a few factors to consider when choosing the best in house renovation loan Singapore.

1. Loan Amount

The first and foremost factor that you need to think about is the loan amount. One way you can do this is to identify those parts of your home that require immediate renovation and determine how much it would ideally cost you to get them done.

In simpler terms, you need to decide your budget based on how much work has to be done.

For instance, Housing Development Board flats owners in Singapore tend to set an ideal budget of $30,000 to $60,000 on average for their renovations. This scale is formulated to cover all of their essentials.

Apart from that, you should note that renovation loans in Singapore are significantly dependent on the loan amount. Hence, if your plans have exceeded your budget, you would have to pay the remaining charges out of your pocket. Due to this reason, it is often advised for individuals to stick within their budget and make their budget manageable before submitting their application.

In addition to the budget of the loan, you also need to contemplate its tenure and processing, and repayment structure, to make it the best for you.

2. Renovation Loan Interest Rate Singapore

In addition to the loan amount, an in house renovation loan Singapore is highly influenced by the interest rate. Please check our renovation loan Singapore calculator to know more about it.

When borrowing from banks and money lenders, you should always opt for the option with the best interest rate for your renovation loan. In addition to the loan rate, you should also keep an eye out for the duration of the interest.

In other words, you need to know whether or not the rates are done on a monthly or yearly basis. This would help you figure out how many instalments you will be paying the total amount of the loan borrowed.

3. Loan Provider

Another critical element to ponder upon for an in house renovation loan Singapore is the loan provider. When compared to the other factors, this is perhaps the most important one out of the lot. A certified loan provider will always be lending you the best interest rates, flexibilities, as well as low upfront fees for loans. On the contrary, a bad loan provider would charge hidden fees and other rates not mentioned in the contract before signing it.

Therefore, experts and professionals often advise selecting the bank or money lender that is certified, licensed, and registered under the registry of money lenders in Singapore. In addition, you should always have thorough research on your loan providers and carefully find out if they are legitimate or not. Try taking a look at online lenders or banks with positive reviews.

Overall, your lenders should always check the boxes in terms of trustworthiness, reliability, and credibility for your best interests.

4. Fees

The last but not the least factor to consider when searching for the best in house renovation loan Singapore is fees.

You may often encounter that unscrupulous money lenders have added additional fees not spoken off until the contract is signed. Unfortunately, this can cause you more harm than benefit. Hence, you need to constantly seek clarification related to all fees and charges associated with a lender and the contract to avail the lowest possible rate for you in your best interest.

In-House Renovation Loan in Singapore : Application, interest rate and dream house

From the above discussion, it is quite evident that renovating your home requires immense expertise both physically and financially.

Once you have decided that your home requires a renovation, it is advised to find that renovation plan from a trusted bank or money lender that best suits your needs and makes you one step closer to achieving your dream home.

A helpful tip would be to think about the following factors when comparing in house renovation loan Singapore: Your monthly income, interest rate, processing fees, other application charges, loan tenure, repayment structure and method (i.e. online, cheque, cash), as well as documents needed.