Choose the Right Renovation Loan for Your Home

Thinking of building your dream house but you’re short on cash? You can take up a renovation loan to ease up your cash flow to facilitate your home renovation! To help you to choose the right type of home loan, we have compiled all the important factors you need to know and consider.

What is the difference between a renovation loan and a personal loan?

Take note of these things when considering taking up a renovation loan instead of a personal loan

Loan Amount
Renovation Loan

The upper limit for various lenders differ, with most renovation loan having an upper limit of S$30,000. Make sure you budget your project carefully so that you can make sure that your renovation loan is able to cover the cost of your project.

Additionally, renovation loans must be approved with a minimum loan quantum of S$15,000.

Personal Loan

Loan quantum for personal loan is a multiple of your monthly income. (See table). As you can see, if you require a larger sum of funds, then a personal loan would be more suitable for you as it allows you to borrow more than $30,000. However, you should note that this only applies for:

  1. Those with annual income of >S$60,000 if they are borrowing from Licensed Money Lenders.
  2. Those with annual income of >S$90,000 if they are borrowing from Banks. 

Additionally, personal loans must be approved with a minimum loan quantum of S$1000.

Renovation Loan

They have strict usage policies and funds acquired can only be used for renovation-related works that are permanent in nature. These include works such as repainting and tiling. These funds cannot be used to purchase appliances and furniture. If you choose to take up a renovation loan, be sure to carefully calculate and budget for your renovation costs to avoid the risk of financial overstretch.

Personal Loan

In contrast, there are no restrictions placed on the usage of personal loans. Thus, funds can be used at the borrower’s discretion, including the renovation of a home or any unexpected issues that arise during this period.

Interest Rates
Renovation Loan

Usually quoted in monthly rest rate which means that the interest is calculated based on the outstanding balance on the loan.

Personal Loan

Quoted in flat rate and the interest payments are calculated based on the original loan amount, however effective rates are always included as well.

Generally, renovation loans have lower interest rates than personal loans (3x - 4x higher), but be sure to look out for any ongoing promotions that banks are offering! Be sure to look at the Effective interest rates of both loans as a point of comparison.
Loan Tenure
Renovation Loan

1yr to a maximum of 5yrs

Personal Loan

1yr to a maximum of 7yrs

Fees and charges
Renovation Loan

Borrowers have to pay up to 1.25% processing/admin fee on their renovation loan. There are also additional charges that can be incurred such as pre-payment and late-payment fees.

Personal Loan

Borrowers have to pay a higher processing/admin fee of 1.5% to 4%+ on their personal loan. There are also additional charges that can be incurred such as pre-payment and late-payment fees.

Renovation Loan

Unfortunately, not all banks and money lenders offer renovation loans. List of some lenders that offer renovation loan (not exhaustive):


  • Maybank
  • CIMB Bank
  • Standard Chartered
  • DBS
  • OCBC Bank
  • HSBC Bank

Money Lenders

  • HHL Credit
  • 118 Credit
  • Capital Funds
  • 1 2 Lend
  • TCC Credit
  • Soon Seng Credit
Personal Loan

This loan is more readily accessible as all money lenders and banks offers personal loans.

Each of the lenders mentioned, all offers different interest rates, loan tenure and charge varying ranges of processing/admin fees. Thus, it is vital for you to do your own research (no matter how tedious) on all the lenders, including the ones not listed to make sure that you choose the most economical loan. Furthermore, you should also note that lenders often offer different kinds of renovation loans.


Now at this point, you might be thinking “walao so mafan meh?”. Well fret not! This is why platforms like us exist! Lendingpot helps customers to compare different rates and offer them the most low cost loan. The best part? We do it for FREE. That’s right, no additional or hidden charges. All you have to do is to sign up on our platform and submit a loan application. After this, you can relax and let us do the work for you!

Keen to take up a renovation?
Now what?

You now need to (a) make sure that you are eligible to take up a renovation loan (b) get your documents ready.

Eligibility criteria for renovation loans:

  • Age and income eligibility requirements differ from bank to bank but in general, all applicants have to be Singapore Citizens or Permanent Residents, aged 21 to 65 years old. As the primary applicant and your joint applicant, you must earn a minimum annual income of $24,000 and $12,000 respectively.
  • Applicants must also be employed, with a minimum income of S$24,000 per annum.
  • You have to either be the property owner or a family member (parent, spouse, child or sibling) who has the owner’s consent.

Documents you need:

  •  Your NRIC
  • The most recent IRAS Assessment Notice
  • Your most recent three months’ pay stubs; or
  • The previous 12 months’ CPF contribution statements
  • Original contractor quotation signed by both you and the contractor
  • Proof of ownership of the property to be renovated
  • Proof of the principal applicant’s and joint applicant’s relationship (for joint applications)
If you meet all the above requirements, apply for the loan and submit the documents to your chosen lender. When the loan is approved, you will receive a letter. As mentioned earlier, note that you won’t be able to use the funds for personal expenses. Instead, loan disbursements for renovations are made to your contractor’s account rather than your own.

Tips for taking up a renovation loan

Communicate with your contractor

Since a quotation for the cost of your renovation works must be provided, discuss with your contractor the budget for your project and the scope of work that needs to be done. As your contractor has expertise in their field of work, working with them would make it easier to accurately determine the loan amount needed.

Plan out your renovations

Beside creating a detailed and concrete renovation plan to help with budgeting, you should also set aside about 20% more to give yourself some wiggle room for unforeseen costs. Unfortunately, because many parts of the renovation project may depend on the previous job to be completed, project delays are more common than one might think. It is important to manage your expectations at the start of the project and plan ahead to avoid cash flow problems if you encounter these situations.

Set payment reminders

Setting payment reminders would ensure that you make the payments on time to avoid any unnecessary charges. Additionally, making timely payments also safeguards your credit score should you want to take up any future loans.

The bottom line

When taking up a loan for home renovations, the obvious choice to reduce your cost of borrowing would be a renovation loan as it offers lower EIRs. However, since renovation loans have an upper limit of S$30,000, you will have to be more stringent with your expenditure on renovation projects.

Generally, it is best to prioritise essential renovation works such as plumbing and electrical wiring. Subsequently, if more funds are needed to cover other renovation costs that may include interior design, you can then take up a personal loan.

Additional things to keep in mind is that you must choose a contractor in advance, concretise your renovation plans as well as specifications and order an appraisal before being able to take out a renovation loan. Following this, there are two parts to qualify for a renovation loan. Borrower and project approval.

All in all, deciding between taking up a renovation or a personal loan depends on the needs of each individual. Be sure to look through all the important factors mentioned in this article and choose the type of loan that is most suited for your project or, even take a combination of both loans!

How to Apply?

Frequently Asked Questions

Roughly how much should my renovation cost?

The average cost of renovating a four-room HDB flat is about $50,000 to $60,000. But this can vary depending on the condition of the house you are purchasing. Having to replace fixtures and flooring would add an additional $15,000 approx.

What if my renovation loan is insufficient to cover my renovation cost?

Borrowers should create a buffer of at least 10% of their expected renovation costs. If the renovation loan is still unable to cover this amount, you can take up a personal loan to cover the costs.

What can I use my renovation loan to pay for?

A renovation loan can be used only for renovation costs for these particular works:
• Electrical and wiring works
• Built-in cabinets
• Painting and redecorating works (e.g. wallpaper)
• Structural alterations
• External works within compound of the house
• Flooring and tiling
• Basic bathroom fittings

How will the bank know what I am using my renovation loan to pay for?

A renovation contract/ detailed quotation from a contractor is required to obtain a renovation loan. Following this, your funds will be disbursed in the form of a cashier’s order to the name of the contractor’s company, thereby making sure that the money goes straight to the contractor. Site visits are also conducted to ensure that your loan used for the stated renovation works as listed in the quotation.

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