Renovation Loans

Singapore’s Renovation Loans (2018) – Lowest Interest Rates

Renovation Loans Guide Singapore 2018

Joanne Poh

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Renovation is part and parcel of the Singaporean rite of passage of buying a first home (usually around the time of marriage). Having forked out so much money for your home and recent wedding, many of you might be broke and looking for the best renovation loan with the lowest interest rates.

So before you call up an interior designer to make your house look less like a shoebox and more like your dream pad, read on on the different interest rates, processing fees and loan tenures of renovation loans in Singapore.

Take note though, renovation loans must only be used for specific purposes. 

 

Contents

  1. Top 5 renovation loans in Singapore 
  2. What is a renovation loan?
  3. How to get the best renovation loan?
  4. How do renovation loans work? 
  5. What can you use a renovation loan for?
  6. Which renovation loans has the lowest interest rates?
  7. DBS renovation loan
  8. Maybank renovation loan
  9. OCBC renovation loan
  10. CIMB renovation loan
  11. RHB renovation loan

 

Top 5 renovation loans in Singapore

Bank loan Monthly interest rate (5 year loan)
DBS renovation loan 4.38% (existing home loan customers)
4.88% (non-home loan customers)
Maybank renovation loan 2.88% (existing home loan customers)
4.33% (minimum $15,000 loan, 4 year loan tenure)
OCBC renovation loan 4.98% (home loan customers)
5.37% (non-home loan customers)
CIMB renovation loan 4.44%
RHB renovation loan 3.68% (flat rate, below $15,000)
2.98% (flat rate, $15,000 to $30,000)
5.8% (monthly rest package)

*For flat rate package, interest is charged on original loan amount.
*For monthly rest package, interest is charged on loan outstanding amount.

Read more: DBS vs OCBC vs CIMB vs Maybank Renovation Loans in Singapore (2018)

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What is a renovation loan?

Renovation Loan

A renovation loan is really not that much different from a personal loan. The main advantage is that interest rates are usually substantially lower. That’s because you’ll be made to show proof of home ownership, which will incentivise the bank to give you a better rate. You must usually be either the owner of the property or a family member of the owner.

Renovation loan
Interest rate 2.88 to 5.8%
Loan tenure 1 to 5 years
Maximum loan amount $30,000 or 6 times your monthly salary, whichever is lower

Loan tenures are usually in the region of about 1 to 5 years.

How much you get to borrow does not depend on your great interior design tastes, but your income. A low monthly salary will most certainly affect the maximum amount you can borrow.

A typical maximum loan amount is $30,000, or 6 times your monthly salary, whichever is lower.

The minimum income requirements are usually about $24,000 to $30,000 a year.

Given the fact that renovating your HDB flat can cost up to six figures, there is a high chance you’ll still have to fork out a large portion of the bill yourself.

What is a renovation loan?It’s like a personal loan, but with much lowerinterest rates.Loan repayment is usuallybetween 1 to 5 years.How much you get depends on yourannual income.Typically,20172018MAXMINThe max loan amount is $30,000 or 6 times your monthly salary, whichever is lower.Minimum income requirements are between $24,000 – $30,000 a year.

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How to get the best renovation loan?

Do your research: Use MoneySmart’s free renovation loan calculator to compare interest loan rates.

Check with the bank where you’re getting your home loan: Banks often extend more favourable interest rates to renovation loan applicants if they’re already existing home loan customers. But don’t assume these rates are necessarily more attractive than other renovation loans on the market.

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What can you use a renovation loan for?

Renovation loans usually cannot be used on furnishings or furniture (some banks do, however, have another product called a furnishing loan for that purpose). Don’t start assuming that you can happily take out a renovation loan and then spend all the money on booze or Ikea Billy Bookcases.

They’re to be used strictly for the renovation of your flat. That usually includes things like:

  • Electrical and wiring
  • Painting and papering the walls
  • Flooring and tiling
  • Carpentry such as building and installation of cabinets and cupboards
  • Structural alterations
  • Works on external parts of the property, including roof or fences
  • Fittings such as bathroom heaters

They’re strictly for the renovation of your flat,such as:Electrical wiringPainting andpapering the wallsFlooring andtilingCarpentry suchas building andinstallation ofcabinetsStructuralalterationsWorks on externalparts of the property,including roof and fencesFittings such asbathroom heaters

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How do renovation loans work?

Getting a renovation loan is a simple matter of applying online, on the phone or in person. Banks have slightly varying requirements, but you typically need to bring the following documents:

  • NRIC
  • Proof of income, e.g. CPF statement, payslips
  • Proof of property ownership, e.g. HDB sales order
  • Contractor’s invoice
  • Proof of relationship between joint applicants, if applicable

You need to decide how much you want to borrow (loan amount), and for how long (loan tenure). Most banks have a renovation loan calculator so you can estimate how much you need to pay per instalment.

Once your loan is approved, the bank will pay the contractor your approved loan amount (after deducting processing, insurance and any other fees) on your behalf. It can be all in one shot or split into multiple cashier’s orders. You might be charged admin fees if you choose the latter option.

Note that renovation loan disbursements are made in the name of your contractor – not you. You won’t be able to cash out the money and use it on your own expenses.

Also, banks may arrange for site visits to make sure nothing fishy is going on.

How do I get a renovation loan?Apply with the bank of your choice1There are three ways you could do this: OnlineIn personOn the phoneBring your documents to the bank2The bank will typically request for the following:Your NRICProof of income(eg. CPF Statements, payslips)InvoiceProof of propertyownership(eg. HDB sales order)Contractor’s invoiceProof of relationshipstatus between jointapplicants(if applicable)Decide how much you want to borrow3Take noteBanks have slightly varying requirements, so check if there’s anything else you might need. !You need to decide:How muchto borrow(Your Loan Amount)How longto borrow(Your Loan Tenure)When will I get the money?4You don’t.The bank will pay the contractor yourapproved amount on your behalf. 20172018Take noteThe bank will deduct processing, insurance, admin and other fees from your loan amount.!

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Which renovation loan has the lowest interest rates?

If you already have a Maybank home loan, lucky you. You can get the cheapest renovation loan in Singapore, at only 2.88% p.a. interest.

Otherwise, RHB has the cheapest home loans at 3.68% p.a. interest for loan amounts <$15,000 and 2.98% for >$15,000.

Of course, interest rates change all the time, so make sure to check the rates out again before you commit.

Renovation loan comparison4.38%4.88%2.88%4.33%4.98%5.38%4.44%3.68%2.98%5.80%existing homeloan customersnon-homeloan customersexisting homeloan customersmin. $15,000 loan,4 year tenureexisting homeloan customersnon-home loancustomersflat rate, below $15,000flat rate,$15,000 – $30,000monthly restpackage

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DBS renovation loan

DBS is one of Singapore’s major banks and it offers renovation loans at a low interest rate. They also have a range of housing-related products. If you are already an existing DBS home loan customer, you get lower interest rates for a DBS renovation loan.

 

DBS renovation loan
Eligibility Singaporean Citizens or PRs aged 21 to 65 years old and owner of the property
Loan amount $5,000 to $30,000 (or 6 times your monthly salary, whichever is lower)
Loan tenure 1 to 5 years
Interest rates 4.38% (existing home loan customers)
4.88% (non-home loan customers)
 Processing fees Handling fee of 1% of the approved loan amount, plus 1% more for insurance.

To qualify, you need to be a Singapore citizen or a PR aged 21 to 65 years old. You also need to be the owner of the property; otherwise, you have to be a direct relation (parent, spouse, child or sibling) and have the owner’s consent. If you are a single applicant, you need to have a minimum income of $24,000 p.a. For joint applications, the main applicant (you) needs a minimum income of $24,000 p.a. AND your joint applicant (your parent, spouse, child or sibling) needs a minimum income of $12,000 p.a.

The processing fee is pretty high however, as aside from the standard 1% of approved amount, they also charge 1% more for insurance. If you change your mind and cancel your loan after it’s been approved, there’s a cancellation fee of 1%. Alternatively, if you decide to pre-pay your entire loan, you can do so but there’s ALSO a pre-payment fee of 1%. Calculate your monthly repayment if you take on a DBS renovation loan.

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Maybank renovation loan

If you are an existing Maybank home loan customer, you effectively get the lowest interest rate on the Maybank renovation loan at 2.88%. Even if you are not, the 4.33% interest on renovation loans for non-home loan customers is also pretty attractive. The processing fee is also pretty low at 1% of the approved amount.

Do note that the interest rates are for a minimum of $15,000 and at least 4 years loan tenure. Otherwise, you’ll incur the current board rate of 8.5% p.a.

Maybank renovation loan
Eligibility Singaporean Citizens or PRs aged 21 to 55 years old (upon loan maturity) and owner of the property
Loan amount $5,000 to $30,000 (or 6 x your monthly salary, whichever is lower)
Loan tenure 1 to 5 years
Interest rates 2.88% (existing home loan customers who apply online)
4.33% (non-home loan customers who apply online)
Processing fees Processing fee of 1% of the approved loan amount.

To qualify, you need to be Singapore citizen or PR as well as the owner of the property. If you are a single applicant, you need to have a minimum income of $30,000 p.a. For joint applications, there needs to be a combined income of $30,000 p.a., with the main applicant earning at least $24,000 p.a.

The processing fee is 1% of the approved loan amount. If you cancel your loan after it’s been approved and before the money is disbursed to the contractor, you will be charged 1% of the amount.

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OCBC renovation loan

OCBC renovation loan does not boast the best interest rates but one of its attractive points is that it can be disbursed one day after approval. So if you are in a rush to get your renovation going, you may choose it at the expense of higher interest rates. Calculate monthly repayment for your OCBC renovation loan.

OCBC renovation loan
Eligibility Singaporean Citizens or PRs aged 21 to 59 years old and owner of the property
Loan amount $5,000 to $30,000 (or 6 x your monthly salary, whichever is lower)
Loan tenure 1 to 5 years
Interest rates 4.98% (existing home loan customers)
5.38% (non-home loan customers)
Processing fees Admin fee of 1% of the approved loan amount + $200 processing fee.

In order to be eligible for OCBC renovation loan, you need to be the owner of the property. If you are a single applicant, you need to have a minimum income of $24,000 p.a. For joint applications, at least one of the applicants must earn a minimum income of $24,000 p.a.

The processing fee is 1% of the approved loan amount + $200 processing fee. If you decide to pre-pay part of the loan in advance, you’ll be charged 2% of the pre-paid amount. And if at some point you want to redeem the entire loan fully, you’ll be charged 2% of the outstanding loan balance.

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CIMB renovation loan

The CIMB renovation loan has an EIR of about 4.85%. The good thing about the loan is that its processing fees are low at only 1% of the approved loan amount.

CIMB renovation loan
Eligibility Singaporean Citizens or PRs aged 21 to 50 years old and owner of the property
Loan amount $5,000 to $30,000 (or 6 x your monthly salary, whichever is lower)
Loan tenure 1 to 5 years
Interest rates 4.44%
Other fees Processing fee of 1% of the approved loan amount

To be eligible for the CIMB renovation loan, you need to be a Singaporean citizen or PR as well as the owner of the property. If you are a single applicant, you need to have a minimum income of $24,000 p.a. Joint applicants can combine their incomes to meet the $24,000 p.a. requirement.

The processing fee is pretty standard at 1% of the approved loan amount. If you change your mind and cancel your loan after it’s been approved, there’s a cancellation fee of 1%. CIMB also offers free home insurance of up to $80,000 and up to 3 free cashier’s orders for split disbursements.

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RHB renovation loan

RHB renovation loan offers a unique flat rate interest at 3.68% on original loan amount. There is also a monthly rest package which charges an interest of 5.8% on outstanding loan amount.

For the former, interest is 3.68% p.a. on loan amounts below $15,000 and 2.98% for loan amount from $15,000 to $30,000.

RHB renovation loan
Eligibility Singaporean Citizens or PRs aged 21 to 55 years old and owner of the property
Loan amount $5,000 to $30,000 (or 6 x your monthly salary, whichever is lower)
Loan tenure 1 to 5 years
Interest rates Flat rate 3.68%
Monthly rest package 5.8%
Other fees Processing fee of 1% of the approved loan amount

To qualify you have to be Singapore citizen and PR aged 21 to 55 and either the main or joint applicant must be the owner of the property.

Main applicants must have a minimum income of $30,000 p.a. Joint applicants must be an immediate relative and be gainfully employed. If BOTH applicants earn $30,000 p.a. each, your combined salary can count towards the maximum loan amount.

The processing fee is 1% of the approved loan amount. If you change your mind and cancel your loan after it’s been approved, there’s a cancellation fee of 1%, capped at $200.

If you decide to pre-pay part of the loan in advance, you’ll be charged 2% of the pre-paid amount. And if at some point you want to redeem the entire loan fully, you’ll be charged 2% of the outstanding loan balance.

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The Ultimate Guide to Renovation Loansin Singapore 2018What is a renovation loan?It’s like a personal loan, but with much lowerinterest rates.20172018Loan repayment is usuallybetween 1 to 5 years.How much you get depends on yourannual income. Typically,MAXMINThe max loan amount is $30,000 or 6 times your annual salary, whichever is lower.Minimum income requirements are between $24,000 – $30,000 a year.What can I use the renovation loan for?They’re strictly for the renovation of your flat,such as:Electrical wiringPainting andpapering the wallsFlooring andtilingCarpentry suchas building andinstallation ofcabinetsStructuralalterationsWorks on externalparts of the property,including roof and fencesFittings such asbathroom heatersHow do I get a renovation loan?Apply with the Bank of your choice1There are three ways you could do this: OnlineIn personOn the phoneBring your documents to the Bank2The bank will typically request for the following:Your NRICProof of income(eg. CPF Statements, payslips)InvoiceProof of propertyownership(eg. HDB sales order)Contractor’s invoiceProof of relationshipstatus between jointapplicants(if applicable)Decide how much you want to borrow3Take noteBanks have slightly varying requirements, so check if there’s anything else you might need. !You need to decide:How muchto borrow(Your Loan Amount)How longto borrow(Your Loan Tenure)20172018When will I get the money?4You don’t.The bank will pay the contractor yourapproved amount on your behalf. Take noteThe bank will deduct processing, insurance, admin and other fees from your loan amount.!Which renovation loan has thelowest rates?Interest rates change all the time, so make sureto check the rates out again before you commit.* All rates are accurate as of Oct 20184.38%4.88%2.88%4.33%4.98%5.38%4.44%3.68%2.98%5.80%existing homeloan customersnon-homeloan customersexisting homeloan customersmin. $15,000 loan,4 year tenureexisting homeloan customersnon-home loancustomersflat rate, below $15,000flat rate,$15,000 – $30,000monthly restpackage

Have you ever taken out a renovation loan? Share your experiences in the comments!

 

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DBS vs OCBC vs CIMB vs Maybank Renovation Loans in Singapore (2018)

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.