A renovation loan in Singapore is an unsecured loan tied to renovation works on a home you own. The lender usually pays the contractor directly against a quotation, and the loan covers works such as flooring, carpentry and wiring, not furniture or appliances. The best one is the offer with the lowest total repaid for the amount and tenure you need.
This page does not list bank rates. Renovation packages are repriced often, and we publish a lender’s figure only when we have read it on that lender’s own page on the day. What follows is how to compare any offer you are given.
A caution on borrowing: renovation costs arrive in the same months as the down payment, legal fees and the first mortgage instalments. A smaller renovation paid from savings costs nothing in interest.
How a Renovation Loan Differs From a Personal Loan
Both are unsecured. The differences are in purpose and process.
| Renovation loan | Personal loan | Line of credit | |
|---|---|---|---|
| What it pays for | Renovation works in the lender’s approved list | Anything | Anything |
| Who receives the money | Usually the contractor | You | You, as you draw |
| Paperwork | Quotation or contract, proof of ownership | Income documents | Income documents |
| Repayment | Fixed monthly instalments | Fixed monthly instalments | Flexible, with a monthly minimum |
| MAS minimum income of S$20,000 | Does not apply | Applies | Applies |
| Counted in TDSR for a home loan | Yes | Yes | Yes |
| Can go into a Debt Consolidation Plan | No | Yes | Yes |
Two rows come straight from the rules. MAS says loans for renovation, like those for education, business and medical purposes, are not affected by the minimum income requirement for unsecured credit. Lenders still set their own income criteria. And the Association of Banks in Singapore excludes renovation loans from the Debt Consolidation Plan.
Compare a Renovation Loan in Singapore on These Five Things
- The EIR. MoneySense advises comparing loans on the Effective Interest Rate. Ask whether the advertised rate is flat or monthly rest. On a monthly-rest loan the two are the same before fees. On a flat-rate loan the EIR is much higher.
- Fees deducted upfront. A processing fee, and sometimes an insurance premium, may be taken from the loan. You then need to top up the difference to the contractor in cash.
- The cap. Lenders cap a renovation loan at a fixed sum or a multiple of monthly income, and the cap can be lower than your quotation.
- What is excluded. Compare the lender’s list with your quotation line by line. Loose furniture, appliances and some fittings are often left out.
- Early repayment and late fees. If you expect a bonus or sale proceeds, a loan without an early repayment charge may cost less overall, as MoneySense notes.
Worked Example: S$30,000 Over Five Years
These are our own illustrative rates, not any lender’s quote.
Offer A: 5% a year on a monthly-rest basis.
- Monthly instalment: about $566
- Total interest over five years: about $3,970
Offer B: 3.5% a year flat.
- Interest: $30,000 × 3.5% × 5 = $5,250
- Monthly instalment: $35,250 ÷ 60 = $587.50
- EIR: about 6.5% a year
The offer with the lower headline rate costs about $1,280 more. That is the reason to compare on EIR and total dollars.
Now add fees. A 1% processing fee on $30,000 is $300, usually deducted before the money reaches the contractor. Total cost of Offer A becomes about $4,270.
Shorten Offer A to three years and the instalment rises to about $899, while interest falls to about $2,370.
Our debt payoff calculator will run the instalment and interest for the rate you are quoted.
The short version: Ask each lender for the EIR, every fee, the amount actually paid to the contractor and the total repayable. Check the quotation against the list of works the lender will finance. The cheapest offer is the lowest total repaid, not the lowest advertised rate.
Where the Renovation Loan Sits in Your Home Budget
A renovation loan is repaid alongside the mortgage, so it helps to see both together.
- It counts in TDSR. MAS lists renovation loans among the debt obligations in the Total Debt Servicing Ratio, which is capped at 55% of gross monthly income when you take a property loan. A renovation loan taken before the home loan is approved can reduce how much you may borrow.
- Your CPF cannot pay for it. Ordinary Account savings can be used for the home itself within limits, but not for renovation. See how much CPF you can use for housing.
- The mortgage comes first. Our mortgage repayment calculator shows your home loan instalment, and the guide to HDB loan vs bank loan explains how much OA to keep in reserve.
An illustrative couple with a $2,400 monthly mortgage instalment who add a $566 renovation instalment are committing nearly $3,000 a month to the home for five years.
HDB Rules That Affect the Timing
For HDB flats, HDB requires owners to engage a contractor from its Directory of Renovation Contractors. Certain works need a permit, which the contractor applies for with the floor plan and proposed works.
This matters for the loan in two ways. The lender’s paperwork is built around the contractor’s quotation, so the contractor needs to be chosen first. And works that HDB does not allow cannot sensibly be financed.
Our step-by-step guide to applying for a renovation loan covers the order of events.
When Another Route Costs Less
- Savings for part of it. Borrowing $20,000 instead of $30,000 at 5% monthly rest over five years saves about $1,320 in interest.
- Phasing. Essential works first, with carpentry or furnishing later from income, means a smaller loan.
- A personal loan for what the renovation loan excludes. For furniture and appliances, compare personal loans on EIR, or an interest-free instalment plan from the retailer if it carries no fee.
- Not a credit card balance. Card interest of around 25% to 29% a year is far above any renovation loan. Our credit cards hub explains how that interest is charged.
Private property owners sometimes consider a home equity loan for a large renovation. The rate is lower, but the home is the security.
What To Do Next
- Get at least two itemised quotations from eligible contractors, and separate works from furniture and appliances.
- Decide how much to pay from savings, then how much to borrow.
- Ask two or three lenders for the EIR, fees, cap, excluded items and total repayable on that amount.
- Put the instalment into our budget planner next to your mortgage.
- Read how to apply for a renovation loan before you sign the contractor’s agreement.
