Are you looking forward to renovating your house in Singapore but do not have ample funds? One of the best options is using a renovation loan. The loan can be used to restore the roofing, create extensions, and redo the electrical network, but how does it work?

A renovation loan is a type of credit that people take when they want to repair their homes. It is only advanced to homeowners and comes with a tenure of one to five years. The tenure depends on the lenders' assessment of the borrower's profile, including the ability to repay the loan. Keep reading as we delve deeper into establishing how to apply for a renovation loan in Singapore.

What to Think of When Applying for a Renovation Loan

When applying for a renovation loan, one of the most important things is selecting the right lender. For example, do you borrow from a bank or moneylender in Singapore? The focus should be identifying lenders with the best terms and conditions, especially the interest rates. So, here are the things to think about.

  • Credit Score

A credit score in Singapore is an important parameter that lenders use to gauge the creditworthiness of borrowers. In Singapore, it is a 4-digit number, between 1000 and 2000, which is given by Credit Bureau Singapore (CBS) based on your credit history. If you have a low credit score, lenders view you as a high-risk party and will attach high interest rates to renovation loans. Some will even decline the application. Therefore, it will be a good idea to start by working on the score to try and improve it. Here are some suggestions to help improve the score:

  1. Get your credit report and correct errors that might be there
  2. Pay the outstanding debts before applying for new credit
  3. Maintain a good credit mix
  4. Avoid making multiple loan inquiries in quick succession


  • Loan Repayment Ability

If the renovation loan is approved, you will be required to repay it in line with the agreed terms and conditions. Therefore, you need to start thinking about loan repayment even before making the application. The goal is to ensure you only borrow what you can repay without causing significant interruptions to your finances.

To determine the amount that 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 make sure 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, such as dropping a few luxuries and directing the money to repay the renovation loan.

  • Ensure that the Renovation Will Add to the House

The best way to approach house renovation loans in Singapore is by looking ahead and figuring out the value to be added. If the renovation does not increase the value, it might not be a good move. Therefore, 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.

How to Apply for a Renovation Loan in Singapore

The process of applying for a renovation loan depends on the lender. Indeed, even the requirements for approving renovation loans in Singapore vary. Some lenders 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 Lender

This is probably the most important step when applying for a renovation loan in Singapore. Some good options include banks and moneylenders. Take a lot of care to avoid falling into the hands of loan sharks. If you notice a lender 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 that is a loan shark.

2. Check the terms and Conditions

Terms and conditions, such as interest and loan term, for any loan are very important because they define how smoothly you will be able to service the credit. Therefore, review the conditions given by the selected lenders and select the one with the best. What is the advertised interest rate of the loan? What about the APR? This might 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 Respective Lender’s Recommended Method of Loan Application

To apply for a renovation loan, lenders 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 lender. For example, some lenders 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 this might not be the best idea. The biggest danger of this method is the risk of falling into the hands of loan sharks. These are unlicensed lenders who usually advertise their loans to have low-interest rates but attach very high processing fees. Their methods of recovering money from borrowers also involve harassment and shaming, which can result in a lot of stress. Other dangers of applying for a loan on your own include:

  • It requires you to review a long list of individual lender’s rules. If you want to target multiple lenders, 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. From reviewing the requirements to preparing the documents, you might require days or weeks.
  • The risk of getting your loan application declined always lingers. Although most lenders have their own ways of reviewing applicants' credit profiles, the chances of getting the loan rejected when applying alone are higher compared to using lender comparison sites.

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, why not use a service like Lendela? Lendela is a loan comparison site dedicated to helping make 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. Lendela compares personal loan offers in Singapore, which is a common loan type to take for the purpose of home renovation.

In addition to reducing the time required to apply for a loan, Lendela also helps borrowers to avoid loan sharks because they only work with banks and licensed lenders. After submitting an application for a loan for your renovation, Lendela uses an advanced matching algorithm that identifies lenders willing to serve borrowers with profiles like yours. So, even if your credit score is not so good, Lendela raises the chances of the application getting approved. Here is a demonstration of how to apply for a loan for your renovation in Singapore, via Lendela.

  • Visit Lendela to submit a short application. This should take only a few minutes.
  • The application is forwarded to multiple lenders for their consideration. Then, the lenders get back with pre-approved offers, showing in your account on lendela.com. These offers are all pre-approved and tailored for your unique situation.
  • Check the offers, especially the interest rates, loan term, and monthly payments, and select the preferred option. If you are unsure of the offer to pick, Lendela will help you understand different terms and how they impact your finances.
  • Once you have picked the preferred offer, you simply book an appointment with the selected lender for you to sign the loan agreement.
  • Once the loan agreement is signed, the money is dispatched to your bank account.

As you can see, there are two main methods of applying for a loan for your renovation in Singapore, applying on your own or using lender comparison sites. If you opt to make the application on your own, the process can be lengthy and complex. This is why you should use a loan comparison site because they are fast and very convenient. 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 lender's policy on early repayment charges.