Renovation Loans

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

renovation loans singapore

Eugenia Liew

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I know firsthand how chor it is for newly weds to pay for both the dream wedding and home at the same time. Even if you hold a modest banquet and only make minor renovations to your house, you’re likely to spend at least $60,000 to $100,000 combined. So for some people, renovation loans can be a real lifesaver.

Instalments work for hotel banquets because most couples plan their weddings way in advance and can thus spread the payment out across say, 8 to 12 months. Renovations are different story – the entire process rarely takes more than 3 months, so even if you try to buy yourself some time to save up, you only have weeks between payments.

That’s where renovation loans come in. Reno loans are like personal loans, except with dramatically lower interest rates because they require you show proof of your home ownership, and the money goes straight into your contractor’s pocket (so you don’t anyhow spend on Starbucks kopi and fancy dinners).

Contents

  1. Overview of renovation loans in Singapore 
  2. Maybank renovation loans
  3. DBS renovation loans
  4. CIMB renovation loans
  5. OCBC renovation loans
  6. Further reading on renovation loans in Singapore

 

Renovation loans in Singapore – Maybank vs DBS vs CIMB vs OCBC

Here’s a comparison of some popular renovation loans in Singapore. I’ve also included an example of how much the monthly repayment would be if you took a $20,000 loan for 5 years.

Bank Lowest renovation loan interest rate Monthly repayment for $20,000 loan, 5-year tenure
Maybank renovation loan 2.88% p.a. monthly rest; for existing Maybank home loan customers $358.31
DBS renovation loan 4.38% p.a. monthly rest; for existing DBS home loan customers $371.77
CIMB renovation loan 4.44% p.a. monthly rest $372
OCBC renovation loan 4.98% p.a. monthly rest; for existing OCBC home loan customers $377.24

Bank with lowest interest rates: Maybank with 2.88% p.a. for mortgage customers and 4.33% for everyone else (min $15,000 loan & 3-year tenure)

Banks that allow $5,000 renovation loans: DBS, OCBC

Lowest minimum income requirement: DBS ($12,000 per applicant, for joint applications)

Lowest processing fee: Maybank & CIMB (1% of approved loan amount)

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Maybank renovation loan in Singapore

Currently, Maybank has the cheapest renovation loan interest rates in town. These rates are “promotional” in that there are certain restrictions (minimum loan amount and tenure). If you do not meet the conditions, forget it. The board rate is 8.5% p.a., which is crap and you should never consider it.

Maybank renovation loan
Loan type Monthly rest
Interest rate (existing home loan customers) 2.88% p.a.
Interest rate (non-home loan customers) 4.33% p.a. (min $15,000 loan & 3-year tenure)
Processing fee 1% of approved loan amount
Max loan amount $30,000 or 6X your monthly salary, whichever is lower
Loan tenure 1 to 5 years
Minimum annual income $30,000

If your mortgage is with them, the rate is 2.88% p.a., which is almost half the industry average of 4% to 5% p.a.. If you bank elsewhere, the rate is still very competitive at 4.33% p.a. if you can take at least $15,000 loan over 3 years.

The processing fee is relatively low at just 1% of the approved loan amount. To apply, you need to earn least $30,000 annually. This is the highest minimum income criteria of the 4 banks.

It is the same for joint applications, but the main applicant must draw at least $24,000. You must also be between age 21 and 55 (age 55 upon loan maturity).

There are 4 ways to apply for the Maybank renovation loan: Online via the Maybank online application form, online enquiry service, SMS or at any of the Maybank branches.

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DBS renovation loan in Singapore

DBS has the next best renovation loan interest rates – the standard rate is 4.88% p.a., and the preferential rate for DBS mortgage customers is 4.38% p.a..

DBS renovation loan
Loan type Monthly rest
Interest rate (existing home loan customers) 4.38% p.a.
Interest rate (non-home loan customers) 4.88% p.a.
Handling fee 1% of approved loan amount
Insurance premium 1% of approved loan amount
Max loan amount $30,000 or 6X your monthly salary, whichever is lower
Loan tenure 1 to 5 years
Minimum annual income $24,000 (or $12,000 per joint applicant)

However, DBS also has higher fees – in addition to the usual handling (processing) fee of 1%, there is an added 1% for insurance premium. This insurance is to protect you from death or total permanent disability, in which case Manulife will pay off the outstanding balance.

That’s a total of 2% of miscellaneous charges, which is quite significant. Because this is deducted from your loan amount, you might need to take a slightly bigger loan to account for it. That means more interest and thus higher monthly repayments too.

The good thing is that the age limit for DBS is much higher than Maybank, so you can take on the loan up until age 65. The minimum annual income requirement is also quite a bit lower at $24,000 ($12,000 each for joint applications). The minimum loan amount is $5,000, which is relatively low.

You will need a DBS/POSB account to service the loan so if you don’t have one, be sure to apply for that first. You cannot apply for the DBS renovation loan online – you must download the application form, fill it up, and drop it off at Bedok Central Post Office, Locked Bag Service No.1, Singapore 914 686.

The bank’s website also has a handy DBS renovation loan calculator to help you plan your finances.

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CIMB renovation loan in Singapore

CIMB renovation loan
Loan type Monthly rest
Interest rate 4.44% p.a.
Processing fee 1% of approved loan amount
Max loan amount $30,000 or 6X your monthly salary, whichever is lower 
Loan tenure 1 to 5 years
Minimum annual income $24,000 (single and joint applicants)

CIMB has no promotional or preferential rate whatsoever – it’s just 4.44% p.a. for everyone. It is not the lowest, but at least there’s only one processing fee (1%). However, do note that the minimum loan amount is $10,000, which is double that of DBS’ $5,000.

The minimum income eligibility is pretty standard at $24,000 p.a. (the same as DBS and OCBC) and you must be age 21 to 55. To count your monthly repayments and interest, use the CIMB renovation loan calculator.

Like DBS, you must download and fill up the CIMB renovation loan application form, and mail it to the bank to apply. This will take quite a few days, and is definitely slower than online applications.

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OCBC renovation loan in Singapore

Being a local bank, OCBC’s renovation loans are much talked about. However, as you can see from the table below, the rates are not the most attractive.

OCBC renovation loan
Loan type Monthly rest
Interest rate (existing home loan customers) 4.98% p.a.
Interest rate (non-home loan customers) 5.38% p.a.
Processing fee $200 (waived if you apply through MoneySmart)
Administrative fee 1% of approved loan amount
Max loan amount $30,000 or 6X your monthly salary, whichever is lower 
Loan tenure 1 to 5 years
Minimum annual income $24,000

Even for existing mortgage customers, the rate is 4.98% p.a., which is higher than all the above bank’s “public” rate. OCBC also charges two fees – $200 for processing and 1% for admin – but if you apply through MoneySmart, you can get the $200 waived to level the playing field.

To be eligible, you must be age 21 to 59 and earn at least $24,000 annually. The minimum loan amount is $5,000 like DBS.

The benefit to taking a loan from OCBC is that they explicitly state that the loan will be disbursed within 1 day of approval. The short lead time is great for those who gan cheong spider and want to hurry get things moving. However, do note that you still need to head down to the bank to apply – there’s no online portal or form. Click here to download the application form to fill up and submit.

You can find the OCBC renovation loan calculator on the official website.

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Ready to take a renovation loan? Here are some things to consider.

 

Should you take a renovation loan?

Sometimes you have no choice. Maybe you have a baby on the way and you need to upsize your home asap. That’s fine.

However, if the only reason you’re more inclined towards a renovation loan is because you prefer the idea of paying “only $300+ per month” over a one-shot payment of $30,000, then that’s not good. You need to ask yourself: Is the few thousand dollars in interest worth it?

That money can probably fully furnish your home. Renovation loan interest rates are around 4% to 5% p.a., which means if you take $20,000 loan with a 5-year tenure at 4.44% p.a., you’ll be paying $2,339 interest, which is substantial.

Unlike a housing loan where it may be literally impossible for you to suddenly cough up $300,000, reno loan sums are typically between $15,000 to $30,000, which is an achievable savings target. If you can, consider taking some time to save up so you can avoid incurring interest.

 

Who offers the cheapest renovation loan in Singapore?

There’s no “cheapest renovation loan” per se; most banks offer preferential rates for customers who already have housing loans with them. So it’s almost always cheaper to go with whichever bank your mortgage is with.

If your mortgage is with HDB, then Maybank currently offers the best rate of 4.33% p.a. for minimum $15,000 loan & 3-year tenure. Maybank also has the lowest preferential rate for those with Maybank housing loans (2.88% p.a.).

 

How much in renovation loans can I get?

You can loan up to $30,000 or 6 times your monthly salary, whichever is lower.

For example, if you draw a monthly salary of $3,500, your loan amount is capped at $21,000. For you to get the full $30,000 loan, you must draw at least $5,000 a month.

 

Do I need to pay anything upfront when I apply for a renovation loan?

Nope. There is usually a processing of handling fee of some sort, and this will be deducted upon loan disbursement. This means that it will be deducted from your approved loan amount directly.

Here’s an example: If you loan $20,000 and the processing fee is 1%, the amount that is disbursed to the contractor will be $20,000 – $200 = $19,800.

For further reading, check out our renovation loans 101 guide. While we try our best to update this article as often as we can, interest rates can change any time. If you need a convenient way to look at the interest rates across all banks, bookmark MoneySmart’s renovation loans comparison tool.

 

Would you consider getting a renovation loan in Singapore? Share with us in the comments below! 

 

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Renovation Loans in Singapore 2018: Where To Get The Lowest Interest Rates

Renovation in Singapore 2018 – How Much Should You Budget?

HDB Renovation & Key Collection Guide: 10 Things To Bring When Visiting Your New Flat

 

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Eugenia Liew

I’m a 90s millennial who’s starting to realise that #adulting is more expensive than it seems on Instagram. When I’m not writing for MoneySmart, I’m usually playing with drain-dwelling stray cats or shopping at Sephora.