Are you looking to renovate your house in Singapore but are short on funds? Consider taking out a renovation loan!
A renovation loan is a type of credit that people take when they want to repair their homes, whether it be restoring the rooting, creating extensions, or redoing the electrical network. It is only advanced to homeowners and comes with a tenure of one to five years. The tenure depends on the bank’s assessment of the borrower's profile, including their ability to repay the loan. Keep reading as we delve deeper into establishing how to apply for a renovation loan in Singapore.
Factors to Consider When Applying for a Renovation Loan
When applying for a renovation loan, one of the most important things is selecting the right loan provider. You should aim to work with loan providers with the best terms and conditions, especially the interest rates. So, here are some important factors to think about.
Loan Repayment Ability
Renovation Should Increase Your Home’s Value
In Singapore, the credit score is an important parameter that banks use to gauge the creditworthiness of borrowers. If you have a low credit score, banks view you as a high-risk party and attach high-interest rates to renovation loans. Some will even decline the application. To improve your credit score, you can:
Ensure you only borrow what you can repay without causing significant interruptions to your finances.
To determine the amount you can repay comfortably, take a closer look at your monthly budget to establish if there is ample room to accommodate an additional credit. Try to ensure that the amount going to pay your debts does not surpass 30-35%.
If the renovation loan is likely to push the credit to a higher percentage, consider adopting some austerity measures.
The best way to approach house renovation loans in Singapore is by looking ahead and figuring out the value to be added. Try to establish the current value and the expected increase if the house was to be sold after the renovation. Remember to use the total amount payable as opposed to the principal alone to get the actual cost of the renovations.
If the renovation does not increase the value, it might not be a good move.
How to Apply for a Renovation Loan in Singapore
The process of applying for a renovation loan depends on the bank, and the requirements for approving renovation loans in Singapore vary. Some banks require a very high credit score, and others are willing to approve applications for those with lower scores. However, here are the common steps when applying for a personal loan in Singapore.
1. Identify a Good Bank
This is probably the most important step when applying for a renovation loan in Singapore. Banks and financial institutions are always trusted options. Beware of falling into the hands of loan sharks. If you notice that a loan provider is not interested in background checks, insists on closing the deal on the phone, and is not ready to give you a copy of the loan agreement, the chances are that they are a loan shark.
2. Check the Terms and Conditions
Terms and conditions, such as interest and loan terms, are very important for personal loans or any kind of loan because they define how smoothly you will be able to service the credit. Review the conditions given by the selected banks and choose the one with the best offerings. What is the advertised interest rate of the loan? What about the APR? This might also be a good time to use a loan calculator in Singapore to determine how much you will be required to pay per month.
3. Follow the Banks’s Recommended Method of Loan Application
To apply for a renovation loan, banks require people to submit an assortment of documents, which they use to determine whether to approve the credit or not. In most cases, this involves filing a lengthy loan application and attaching documents such as bank statements for the last 6-12 months. A quotation from the contractor who will repair the house will also be required.
4. Submit All the Required Documents and Wait for Loan Approval
Once you submit the documents, wait for the loan to be approved. Remember that it can also be rejected if you do not meet the requirements set by the bank. For example, some banks might decline the loan application if your credit score is too low or believe you might be unable to pay. If the application is rejected, you have to look for funds elsewhere.
Risks of Applying for a Renovation Loan on Your Own
When thinking of a renovation loan, the first instinct might be to apply it on your own, but the big danger of this method is the risk of falling into the hands of loan sharks. These are unlicensed loan providers who usually advertise their loans to have low-interest rates but attach very high processing fees. Their methods of recovering money from borrowers may also involve harassment and shaming, which can result in a lot of stress. Other drawbacks of applying for a loan on your own include:
It requires you to review a long list of individual banks' rules. If you want to target multiple loan providers, the amount of information that you need to read and understand is a lot.
The process of applying for a renovation loan in Singapore on your own can be lengthy, taking anywhere from days to weeks.
There is a higher risk of your loan application getting rejected.
Why Lendela is the Best Way to Apply for a Loan for Your Renovation
Instead of trying to apply for a loan on your own, the much safer and more efficient option is to apply through Lendela. Lendela is a loan comparison site dedicated to making the loan application process easy, fast, transparent and convenient. Instead of taking hours or days trying to complete applications, Lendela only requires a few minutes.
In addition to reducing the time required to apply for a loan, Lendela is also a secure way of getting a renovation loan in Singapore. Partnering exclusively with authorised banks and financial institutions, Lendela helps borrowers steer clear of loan sharks. After submitting an application for a loan for your renovation, Lendela uses an advanced matching algorithm that identifies banks and financial institutions willing to serve borrowers with profiles like yours. So, even if your credit score is not the best, Lendela raises the chances of the application getting approved. To apply for a loan for your renovation in Singapore via Lendela, you only have to follow a few simple steps:
Visit Lendela’s website to submit a short application. This should take only a few minutes.
The application is forwarded to multiple banks and financial institutions for consideration. Then, the banks and financial institutions get back with pre-approved offers, shown in your account on lendela.com. These offers are all pre-approved and tailored to your unique situation.
Check the offers, especially the interest rates, loan terms, and monthly payments, and select your preferred option. If you are unsure of the offer to pick, Lendela will help you understand different terms and how they impact your finances.
Book an appointment with the selected bank to sign the loan agreement.
Once the loan agreement is signed, the money is dispatched to your bank account.
Although you could apply for a renovation loan in Singapore on your own, applying through a trusted loan comparison site like Lendela can make the process go a lot smoother and easier—not to mention, get you the best loan offer. Remember that no matter the method you use to apply for a renovation loan in Singapore, you need to follow the agreed repayment schedule until the loan is cleared. If you want to clear the loan earlier than expected, make sure to check the bank's policy on early repayment charges.
A home renovation loan provides homeowners with funds to fix, repair, and renovate their homes.
When applying for a renovation loan in Singapore, consider your credit score, ability to repay the loan, and whether your renovation project will increase the value of your home.
You can apply for renovation loans on your own or through a loan comparison site like Lendela. However, one should understand the risk of loan sharks and the lengthy application process when applying on their own.
Lendela offers a fast, convenient, and efficient way to find the best renovation loan offer tailored for you.