Planning to renovate your home but not sure whether you should go for a renovation loan or a personal loan? Read our comprehensive guide to understand the different features and benefits, and make an informed decision when it comes to financing your dream home’s renovation project.

What is a renovation loan? 

Renovation loan helps you finance your home renovation project. These loans offer a larger borrowing limit compared to personal loans and have a longer repayment period. They also come with lower interest rates, making them an affordable way to finance your home improvement project.

One of the most significant advantages of renovation loans is that they are flexible, and you can use them to fund different types of renovation projects, from small upgrades to major renovations. Additionally, since the loan is specifically intended for home renovation, the loan providers usually disburse the funds in stages based on the progress of your renovation project. This way, you can ensure that you only use the funds for their intended purpose, and you won't run out of money midway through the project.

Overall, renovation loans can be an excellent way to finance your home renovation project without putting your home or other assets at risk.

How much does home renovation cost in Singapore?

The average cost of home renovation in Singapore varies depending on the type of renovation you want to do and the size of your home. According to Qanvast, an online interior design and renovation platform, the average home renovation costs approximately $40,000 to $60,000 in Singapore.

What expenses are covered under renovation loans?

Renovation loans cover a wide range of expenses related to your home renovation project. These loans help finance anything from minor repairs to major renovations, including kitchen or bathroom upgrades, painting, flooring, roof repairs, or even room additions. Some renovation loans may also cover the cost of furniture, appliances, or other fixtures that you may need to purchase for your renovation project. Other charges include renovation contractor fees, interior designer fees, labour costs, plumbing and electrical work, and masonry work.

The interest rate of renovation loan 

The interest rates for renovation loans in Singapore are typically lower than personal loans because these loans are secured against your property. Interest rates for renovation loans can range from 2.5% to 5% per annum, depending on the loan provider, the loan amount, and the renovation budget.

What is a Personal loan?

A personal loan is a type of loan that you can use for anything you want, whether buying a new flagship phone, paying for an extravagant trip, or financing a home renovation project. Unlike other types of loans such as home loans or car loans, personal loans are unsecured, which means you don't need to provide any collateral to get the loan approved.

Personal loans come with fixed repayment periods, and you can usually borrow a set amount, with interest rates based on your credit score and financial history. The application process for personal loans is usually quick and straightforward, and you can receive the funds within a few days of approval.

One of the main advantages of personal loans is their flexibility; you can use the funds for any purpose you want, and you don't have to provide any specific reason for the loan. Overall, personal loans can be a useful tool to help you finance your goals, whether big or small.

The interest rate of personal loan

Since personal loans are unsecured, they come with higher interest rates compared to renovation loans. Interest rates for personal loans in Singapore can range from 3.5% to 9% per annum, depending on the banks or financial institutions and the loan amount.

What's the difference - renovation loan vs personal loan

Here's a comparison table to help you decide which loan is best for your home renovation needs:


Renovation Loan

Personal Loan

Interest Rate

Lower, ranging from 2.5% to 5%

Higher, ranging from 3.5% to 9%



Not Required

Loan Amount

Higher, up to 6x your monthly income

Lower, up to 4x your monthly income

Repayment Period

Shorter compared to a personal loan, typically 1 to 5 years

Longer loan tenure, ranging from a maximum of 5 years to 7 years

Purpose of Loan

For home renovation only

Any purpose, including personal lifestyle needs

Why home renovation loan should be your first choice over personal loan?

If you're specifically looking to renovate your home, a home renovation loan should be your first choice.

  • You can often borrow a larger amount with these loans at a lower interest rate compared to personal loans.

  • Home renovation loans are designed to finance home improvement projects, so you'll have a better chance of getting approval for the loan, and you won't have to worry about using the funds for other purposes.

  • By taking a renovation loan, you can also increase the value of your home, making it a smart investment in the long run.

With a renovation loan, you can focus on creating your dream home, while your loan provider takes care of the financing.

How and where can you apply for a home renovation loan? Try Lendela

At Lendela, we partner with various banks and financial institutions in Singapore to help you find the best loan for your home renovation needs. By using an advanced matching algorithm, our online loan comparison platform can identify the loan providers that are best recommended for your profile. Plus, our loan application process is fast and hassle-free, allowing you to receive loan offers in minutes.

Key Takeaways

  • Renovation loans and personal loans can be used to finance home improvements.
  • Renovation loans are secured and have lower interest rates, while personal loans are unsecured and have higher interest rates.
  • Renovation loans are best for those who need a larger loan amount.
  • Personal loans are suitable for those who don't want to use their property as collateral and only need a smaller loan amount.