Renovation Loans in Singapore | Factors to Consider for Renovation Loans
Loans | Renovation Loansby Priyadarshini 3 November 2023
A renovation loan might help you augment your finances when remodelling your property. Learn how it works, what it may be used for, and what to look for when looking for a remodelling loan. In this blog, we talk about renovation loans in Singapore.
Renovation Loans in Singapore
Now that you have the keys to your new home, it’s time to get the renovations completed so you can move in as soon as possible. In an ideal world, everyone would have enough savings to cover the cost of their house restoration. A renovation loan may be worth considering for those of us who are short on cash to pay for all of the necessary renovations and furnishings.
As the name implies, a renovation loan is a loan specifically created for homeowners to pay their home restoration project. Of course, you don’t have to rely exclusively on a remodelling loan to make your ideal house a reality. In fact, a renovation loan can boost any savings you have accumulated.
What can you do with a renovation loan?
A renovation loan can be used to pay for anything linked to renovation, such as:
- Tiling and flooring
- Painting and decorating projects
- Electrical and wiring installations
- Standard bathroom fixtures
- Changes to the structure
- External works within your home’s compound, such as the balcony, roof, garden, or front porch
- Solar panel installation
What are the limitations of a remodelling loan?
You cannot use a remodelling loan to purchase furniture, household appliances, artwork, smart home devices, drapes, or other items.
Factors to Consider for Renovation Loans in Singapore
Interest rate promotion
Anyone wishing to reduce the cost of their renovation loan should examine the various renovation loans available and keep an eye out for promotional interest rates that banks give on a regular basis. Banks such as DBS/POSB and OCBC are now giving cheaper interest rates to customers that go green and pledge to make their homes more energy-efficient, environmentally friendly, and sustainable.
Aside from the interest rate, consider any processing fees that may be associated with the renovation loan. Some banks charge a processing fee of 1% of the authorized loan amount, while others charge 1.5 %. Some companies do not charge any processing fees at all.
Maximum loan amount
Aside from performing your own research to determine how much you need to borrow to support your renovation project, it is also critical to understand how much you can actually borrow. The maximum loan amount available to borrowers for renovation loans in Singapore is six times their monthly salary or S$30,000, whichever is less. A minimum yearly salary of S$24,000 is also required to apply for a renovation loan.
Other charges and fees
When looking for a renovation loan, be aware of the fees and charges that may apply in specific scenarios, such as late payment, early repayment, and cancellation. The early repayment cost is often set at 1-2 percent of the outstanding loan balance, so keep this in mind while determining the finer elements of your renovation loan, such as loan tenure, loan size, and your ability to repay the loan.
What is the procedure for obtaining a remodelling loan?
Personal loans often have higher interest rates than renovation loans. Those who take out a remodelling loan will be required to make monthly installments over the period of their loan tenure, which can range from one to five years. To prevent borrowers from misusing the renovation loan, the approved loan amount will be delivered directly to the renovation contractors by cashier’s check or several cashier’s checks.
Post-disbursement site visits may also ensure that the renovation loan proceeds are utilized for the indicated renovation activities as illustrated in the quotation.