Renovation Loan Singapore
As the name so aptly describes, a ‘Renovation Loan’ can be subscribed for by an applicant when he/she is looking to renovate their current home, completely or parts of it. The said renovation must be authorized or worked upon by a certified contractor or interior designer and may include any or all of the following in a single instance-
- Complete electrical and wiring related works.
- Carpentry that is limited to the kitchen, bedroom (wardrobes, built in cabinets etc).
- Flooring, tiling, bathroom fittings and other such random works.
- Works that are limited to the external section of the house, including roof, fences, gates etc.
- Contracted work such as painting, wallpapering or other such external or internal decoration works.
- Any major or minor structural alterations to the existing building.
However, kindly note that renovation loans do not account for the purchase of electrical appliances or other electronic devices for your new house. Renovation loans in Singapore are an ideal choice when you are looking to upgrade, or add a new aesthetic dimension to your cherished home.
Features of Renovation Loans
- In Singapore, banks offer renovation loans with tenures ranging from 1-5 years ONLY.
- Maximum loan amount is equal to 6x of the applicant’s salary or S$30,000 (whichever is lesser).
- Adding a co-applicant increases the maximum loan amount, accounting for the maximum S$30,000 per additional co-applicant.
- There is an element of ‘hidden costs’, however, this is just the standard application and processing fees, late payment, non-payment fees etc. This value differs from bank to bank.
- Most banks in Singapore offer renovation loans in terms of flat interest rates as well as monthly rest interest rates. A more detailed explanation is detailed in a later section.
- Currently, the following banks offer this loan in Singapore- DBS, OCBC, CIMB, Maybank, RHB and CIMB.
Eligibility for Renovation Loan in Singapore
In terms of basic eligibility, the applicant must satisfy the following requirements in order to qualify for a renovation loan-
- The applicant must be a native born Singapore citizen or a permanent resident.
- He/she must not be younger than 21 years and older than 60 years at loan maturity.
- The crucial annual income requirement varies from one bank to another. However, this number usually starts at a minimum of S$24,000 for single and/or joint applicants.
- If the loan is taken in partnership with a joint applicant(s), then such partners must be immediate family member(s) of the main applicant.
Kindly note that the above lists basic requirements pertaining to the acquisition of a renovation loan. Banks, in their individual capacity may require additional proofs and documents.
Documentation and Other Formalities for Renovation Loan
Keep the following documents handy when applying for the renovation loan. Do note that this is a very basic list, banks may in their individual capacity demand for more documents and proof.
- For Salaried Applicants- Latest payslips, CPF statement for last 6 months, latest income tax assessment notice.
- For Self-Employed Applicants- Latest income tax assessment notice, CPF statement for the past 2 years, invoice that has been duly verified and signed by the customer and contractor.
- Photocopy of National Registration Identity Card (NRIC).
- Duly completed application form with proper signatures.
- Proof showing applicant’s ownership of the property that needs renovation.
Applicable Interest Rates on Renovation Loans
The popular renovation loan options in Singapore are quite obviously those that charge a comparatively lesser interest rate. Again, there is distinction between the two associative formats that are quite popular in Singapore- Flat Rates and Monthly Rest Interest Rates.
Flat Rates- Herein, interest is charged based on the original loan amount.
Monthly Rest Interest Rates- Herein, interest is calculated based on the reducing balance model. This means, as the outstanding loan amount reduces each month, the applicable interest rate varies too.
Popular options include, DBS Bank (4.88%- Monthly Rest), Maybank (2.98%- Fixed), CIMB (2.99%- Fixed), OCBC (loan equals S$10,000)- (5.38%- Monthly Rest), RHB (loan between S$10,000- S$14,999)- (3.68% Fixed, 5.98% Monthly Rest), RHB (loan between S$15,000- S$30,000)- (2.98% Fixed, 5.38% Monthly Rest).
In Conclusion- Renovating your dream abode adds a fresh new appeal to your cherished property, and maybe, adds many more years of homely charisma to it. Helping you in this quest is a wide selection of attractively packaged renovation loans from some of the leading banks in Singapore, that distinguish themselves in terms of the features and simplicity offered. Go ahead, plan your home renovation today!
Explore the Renovation Loan from Top Banks