How To Choose the Right Renovation Loan for Your Project


Table of Contents

Table of Contents

A young homeowner discussing renovation project with contractor and thinking how to choose the right renovation loan

Moving into a new home is an exciting venture. This doesn’t just allude to a new chapter in life, but it’s also a big financial undertaking. On top of figuring out how best to settle your mortgage, there’s also another issue you’ll need to resolve: home renovations.

Home renovations can be a great way to improve your living space, increase your property value, and bring new life to your home. However, financing a home renovation project can be a complex process, and choosing the right loan is an important step in ensuring the success of your project.

In Singapore, there are several different types of loans available to fund your home renovations, each with its advantages and disadvantages.

Read on to learn more about them before deciding on the one that best suits your needs.

Home Renovation Loan versus Personal Loan

1. Home Renovation Loan

A home renovation loan is a specific type of loan designed for home renovation projects. It is offered by banks, financial institutions and licensed money lenders in Singapore and provides a convenient way to finance your renovation project. The loan amount and repayment period will depend on the size of your renovation project and your financial situation.

2. Personal Loan

If you need a smaller loan for your renovation project, a personal loan may be a good option. This type of loan is unsecured, meaning you don’t need to provide collateral, and can be used for a variety of purposes, including home renovations or even home furnishings. Personal loans are available from banks, licensed money lenders, credit unions, and other financial institutions in Singapore.

Finding the right loan for your home renovation

Regardless of the type of loan, the size of personal and renovation loans is highly dependent on two things: your mortgage and your annual income. On average, Singaporeans are known to spend about $50,000 to $60,000 for an HDB renovation and up to 20% of their home value. So it’s important to do your home renovation budget well.

Renovation loans can bear the brunt of this cost, as you can typically acquire a loan amount of up to $30,000. As its name suggests, a renovation loan is a loan used solely for the renovation of your home. It cannot be used to pay for home appliances, furniture, decorative items, etc even though a home needs these things.

Getting home a renovation loan or a personal loan from a bank

If you’re taking out a bank loan, you can expect certain restrictions on how you can use the renovation loan. Moreover, the money would go straight to your interior designer or contractor directly.

Banks can also apply an additional surcharge if your loan has to be disbursed in stages or to different vendors. Do note that these renovation loans don’t cover furniture expenses either.

On the other hand, if you wish to have more leeway in what you can use the funds for, perhaps a personal loan may be more suitable for you. Apart from being able to use the loan whenever and however you want, personal loans also entail less paperwork. You don’t need to present any renovation contract or quotations to apply for the loan.

Key differences between a home renovation loan and a personal loan

1. Interest rates

Both the interest rates for personal loans and renovation loans from banks typically start around 3.5% per annum. The interests are typically calculated using a flat rate calculation.

With licensed money lenders in Singapore, you can get interest rates of 1-4% per month. Unlike banks, licensed money lenders use reducing balance calculations.

2. Loan eligibility

With banks, you have to be at least 21 years old and a Singaporean or Singapore Permanent Resident. In addition, you need to earn a minimum income of 24,000 per year. You also need to have a good credit score.

While anyone meeting the banks’ requirements can apply for a regular personal loan, the same can’t be said for renovation loans. To qualify for a bank’s renovation loan in Singapore, an essential requirement is that the applicant must be the property owner and show the necessary proof.

With licensed money lenders, you need to be at least 18 years old and either be a Singaporean, Permanent Resident, or foreigner employed in Singapore. There are no minimum income requirements, though this would affect the maximum loan amount you can obtain.

Unlike banks, licensed money lenders do not practise credit discrimination. Your application can still be approved even if you don’t have the best credit score.

Bottom line

When choosing a loan for your home renovation project, it’s important to consider your financial situation, the size of your project, and your long-term goals. Be sure to shop around and compare interest rates and repayment terms from different loan providers before making a decision.

With the right loan, you can finance your home renovation project with confidence, knowing that you’re getting the best possible financing for your needs. Whether you’re looking to make cosmetic changes, add new rooms, open up the space, or completely transform your home, the right loan can help make your renovation project a success.

With licensed money lenders like Goldstar Credit, our renovation loans are flexible and tailored to your needs. You are also free to spend your loan on furniture and renovation fees however you see fit – this includes exploring hiring different vendors and contractors for different renovation procedures.

Reach out to us today to start renovating your dream home!


While we try to provide the most accurate information on this website, it may not reflect the most current developments. The information on this website may be changed without notice and is not guaranteed to be complete, correct, or up-to-date. All information provided is for informational purposes only and shall not be relied upon as professional advice. We shall not be liable for any loss or damage resulting from the use of this website

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