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Everything You Need to Know About Renovation Loan Schemes

12 Jul 2016

Tips & Advice


Now that you’ve spent a good bulk of your life savings on your new nest, you might just come to realize that you don’t have the spare funds to turn it into the home of your dreams.

Poh Heng Court by Distinct Identity

Before resigning to life inside an empty shell of a home or wondering if you can work magic with your primary school-worthy DIY skills, there’s a solution in the form of a renovation loan.

In view of the high costs involved in a home renovation—a typical one can cost anywhere between $10,000 and $150,000, banks here have set up renovation loan schemes for homeowners who want to turn their fantasy home into reality.

So, what’s a renovation loan exactly?

Renovation loans are, as they are called, loans for the renovation works of your home. They are meant to help you finance your overall renovation costs. Your renovation can range from a simple bathroom overhaul to an entire home makeover. Most of the banks in Singapore offer a renovation loan scheme, although the terms of conditions differ from bank to bank.

Am I eligible for a loan?

Different banks will have varying eligibility requirements that include age restriction, citizenship status, and income.
There are single and joint application options available. Joint applications are where you apply for the loan with another person, someone who is your spouse, parent, or child. Joint applications will have a different set of criteria and a different loan amount available.

Do renovation loan schemes cover furnishings?

Punggol Walk by Fuse Concept

Furnishings are typically not covered in the renovation loan scheme. There are alternative schemes for that. RHB, for instance, has a loan scheme for exclusively for furnishings.
While the official word for limitations of work for renovation loans can be confusing, you should rest easy. As Candy Ng from The Interior Place explains, “There are no restrictions on the types of renovations allowed by the loan. The loan covers everything within an interior designer’s scope of work.” She also added by saying that an invoice will be required to process the loan so potential issues will be cleared before you invest in a loan.

What documents are required for the loan application?

In general, these are the following documents you should prepare beforehand:

  • Photocopy of your NRIC
  • Pay slips and CPF contribution history
  • Your contractor’s invoice
  • HDB sales order – for proof of property ownership
  • The bank’s application form
  • For joint applications, proof of relationship between the main applicant and the joint applicant

How do I go about applying for a renovation loan?

Once you have the documents ready, most banks will require you to send the documents to them via mail. You can also choose to make an appointment with the bank and submit your application at the branch itself.
Once the bank has approved the loan, you will receive a notification letter and a cashier order will be issued under your contractor’s name/company.
Annie Tan from New Interior Design also adds: “Interior design firms can guide homeowners along the process and recommend banks and specific individuals handling renovation loans.” That means you’ll be able to save time looking for a loan provider and we placed in experienced and trusted hands!

Are there any additional fees to pay?

Yes, there is usually a processing/handling fee of 1 percent of the renovation loan amount that will be deducted from the disbursed loan amount.
OCBC includes an additional $200 processing fee in addition to the administrative fee of 1 percent. CIMB charges a $10 fee for every cashier’s order issued. POSB and DBS take an extra 1 percent for insurance.

Which banks offer them, and which one should I go to?

Banks that offer renovation loans include RHB, Maybank, CIMB, POSB, DBS, OCBC.
Read up on the terms and conditions from each bank to see which scheme best fits your needs. You should look out for interest rates, the timeline given for loan repayment (can you afford the repayment plan?), eligibility terms (some banks have stricter requirements), how much you are able to borrow from the scheme, and the type of renovation works covered by the loan.
Although the choice of which bank largely rests on your personal needs and preference, Russell Chin from Inspire ID Group suggests Maybank for those on the fence: “Their service and approval turnaround time is excellent as well as their competitive interest rates,” he said. At 5.18%, Maybank’s rest rates are indeed the lowest among the other banks, with OCBC coming in second at 5.38%.

How much can I get from the loan?

POSB/DBS: Minimum is $5,000 and maximum is $30,000
OCBC: Loan amount up to six times your monthly income or $30,000, whichever is lower
Maybank: Loan amount up to six times your monthly income or $30,000, whichever is lower
RHB: Minimum is $10,000 and maximum is $30,000
CIMB: Loan amount up to six times your monthly income or $30,000, whichever is lower

Bank Loan details
POSB/DBS Minimum is $5,000 and maximum is $30,000
OCBC Loan amount up to six times your monthly income or $30,000, whichever is lower
Maybank Loan amount up to six times your monthly income or $30,000, whichever is lower
RHB Minimum is $10,000 and maximum is $30,000
CIMB Loan amount up to six times your monthly income or $30,000, whichever is lower

What are the interest rates for loan repayment?

Interests rates vary greatly from bank to bank and are oftentimes dependent on how much you loan.
Some banks offer either a monthly rest package or a flat rate package. Monthly rest is where interest is charged on the loan outstanding amount, while a flat rate is charged on the original loan amount.


Type of Interest Rate

Interest Rate*

POSB/DBS Flat rate 2.31%
CIMB Monthly rest 0.13%
RHB Flat rate/Monthly rest 2.98%/5.80%
Maybank Monthly rest 5.18%
OCBC Monthly rest 5.38%

How long is the loan repayment period?

The loan tenure ranges from one to five years.

Foresque Residence by Starry Homestead

So there you have it—the 101 of renovation loan schemes in Singapore. Now that you know what it entails, do your calculations and decide if a renovation loan is for you.
Now that you have better knowledge of funding your home renovation, check out some tips (here and here) to spice up your home redesign!

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