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365 Credit Solutions Pte Ltd is a licensed moneylender (License No. 17/2024) listed in the Registry of Moneylenders, under the Ministry of Law in Singapore.

Renovation Loan Vs. Personal Loan: Options For Home Upgrades

asian girl thinking renovation loan vs personal loan for home upgrade

Home renovations can add significant value to your property and transform your living space into your dream home. However, financing these projects can be challenging, especially if you need more cash. 

Fortunately, personal and renovation loans can provide the necessary funding for your project, whether you are planning to renovate your kitchen, bathroom, or home.

In this article, we’ll dive into the differences between personal loans and renovation loans, and how they can be used to finance your renovation.

Renovation Loan Vs. Personal Loan: What’s the Difference

Homeowners looking to finance a renovation project have two options: renovation loans or personal loans. While both options can be used for home renovation, there are some key differences between them.

Here’s the table detailing the loan amount, interest rates, tenure, fees, and minimum income required.

Features Renovation Loans Personal Loans
Loan amount Banks: Up to 6 times your monthly income

Licensed moneylenders: Up to 6 times your monthly income

Banks: Up to 10 times your monthly income

Licensed moneylenders: Up to 6  times your monthly income

Interest rate Banks: Starts from 4.68% p.a. 

Licensed moneylenders: 1-4% p.m.

Banks: Starts from 3.88% p.a.

Licensed moneylenders: 1-4% p.m. 

Repayment period Banks: Up to 5 years

Licensed moneylenders: 6-12 months

Banks: Up to 5 years

Licensed moneylenders: 6-12 months

Processing fees Banks: Up to 1% of the loan amount

Licensed moneylenders: Up to 10% when the loan is granted

Banks: Up to 3% of the loan amount

Licensed moneylenders: Up to 10% when the loan is granted

Eligibility criteria Banks & moneylenders: Minimum income of S$24,000 p.a. Banks: Minimum income of S$30,000 p.a.

Licensed moneylenders: Minimum income of S$24,000 p.a.

Note that the actual loan amount, interest rate, and repayment period may vary depending on the borrower’s creditworthiness, income level, and other factors, and also depending on the lender’s policies and requirements.

What is a Renovation Loan

Renovation loans are primarily used to finance home renovation projects in Singapore. This loan is specifically tailored for renovation projects and offers features that are not available with personal loans, such as the ability to customize the loan amount, repayment period, and interest rate. 

This means that homeowners can get a loan tailored to their specific renovation needs without worrying about paying more than they need to. 

Pros and Cons of Renovation Loans

Pros: 

  • Lower interest rates compared to personal loans
  • Flexible repayment terms
  • The ability to finance larger renovation projects

Cons:

  • The need for collateral to secure the loan with banks
  • Fees and charges associated with the loan
  • The possibility of overextending your finances

Best Renovation Loans in Singapore

Here are several banks and financial institutions that offer renovation loans with varying interest rates, loan amounts, and repayment periods.

Lender Interest Rate Minimum Annual Income Repayment Period Processing Fees

DBS Green Renovation Loan

4.68% p.a S$24,000 Up to 5 years 1% of approved loan amount

OCBC Renovation Loan

4.18% p.a S$42,000 Up to 5 years 0.5% of loan amount (admin fee)

CIMB Green Renovation-i Financing

From 4.15% p.a S$24,000 Up to 5 years 1.2% of approved loan amount

POSB Renovation Loan

From 4.68% p.a S$24,000  Up to 5 years 1% of approved loan amount

365 Credit Renovation Loan

1% to 4% per month Singapore Citizen:S$24,000
Foreigners: S$36,000
Up to 12 months Not more than 10% of approved loan amount

Note: The interest rates, minimum annual income requirements, repayment periods, and processing fees provided are for general guidance only and may be subject to change. It is recommended that you confirm the details with the respective lenders before applying.

What is a Personal Loan

Personal loans are a form of unsecured debt in which the lender provides borrowers with an amount of money and requires them to repay the loan with interest over a predetermined amount of time. 

Personal loans can be used for various expenses, including home renovation projects. They are typically easier to obtain than other types of loans, though they may come with higher interest rates and fees. 

Pros and Cons of Personal Loans

Pros: 

  • Can be used for any purpose, including home improvement.
  • Fast approval times and disbursement of funds.
  • They don’t require collateral, so you don’t have to use any of your assets as security.

Cons:

  • Personal loans often have higher interest rates than other types of loans.
  • Shorter repayment terms, which can result in higher monthly payments.
  • May be difficult to qualify for if you have a low credit score or unstable income.

Best Personal Loan in Singapore

Take a closer look at the best personal loans for renovation in Singapore, comparing the features to help you find the right loan for your needs and budget.

Lender Interest Rate Minimum Annual Income Repayment Period Processing Fees

DBS Personal Loan

3.88% p.a S$20,000 Up to 5 years 1% of approved loan amount

OCBC Personal Loan

From 3.50% p.a S$20,000 Up to 7 years 2% of approved loan amount

Standard Chartered CashOne Personal Loan

3.48% p.a S$20,000 Up to 5 years 0

HSBC Personal Loan

4% p.a S$30,000 Up to 7 years 0

UOB Personal Loan

3.4% p.a S$30,000 Up to 5 years 0

Note: The interest rates, minimum annual income requirements, repayment periods, and processing fees provided are for general guidance only and may be subject to change. It is recommended that you confirm the details with the respective lenders before applying.

Factors to Consider When Choosing a Loan for a Renovation Project

When choosing a loan for your renovation project, you should consider several factors. Here are the top five factors that you need to keep in mind when choosing a loan for your renovation project:

  • Loan amount and interest rates 

The first thing you need to consider when choosing a loan is the amount of money you need and the interest rate you’ll be charged. Make sure to compare the interest rates offered by different lenders and choose a loan that provides a competitive rate that suits your budget.

  • Repayment terms and flexibility

Some lenders offer flexible repayment options, such as longer loan tenures or the option to make partial repayments. It’s important to choose a loan that provides flexibility in repayment terms so that you can repay the loan according to your financial situation.

  • Fees and charges

You also need to consider the fees and charges associated with the loan. These can include processing, early, and late payment fees. Read the fine print and choose a loan with minimal fees and charges.

  • Loan approval process and timeline 

The loan approval process and timeline can also impact your decision. Some lenders have faster processing times and can approve your loan application in a matter of days, while others may take several weeks. Choose a lender that provides a quick and efficient loan approval process to avoid any delays in your renovation project.

  • Eligibility criteria

You also need to consider other factors that can impact your loan eligibility, such as your credit score and income level. Lenders typically have minimum credit score requirements and income levels that borrowers need to meet to be eligible for a loan. Check your credit score and income level before applying for a loan, and choose a lender that aligns with your financial situation.

FAQ

Is it Better to Take a Renovation Loan?

It depends on what you plan to use the loan for. Generally, renovation loans are better than personal loans if you use them specifically for renovating your home in Singapore. This is because renovation loans typically offer lower interest rates and more flexible repayment options than personal loans. 

Can I Use CPF to Pay Renovation Loan?

No, you cannot use your Central Provident Fund (CPF) savings to repay a renovation loan or cover the costs for certain types of renovations in Singapore. CPF was designed as a savings scheme for retirement and is not intended for financing home improvement projects. However, you may use the funds from your CPF Ordinary Account for investment purposes and pay for your home loan in cash.

How to Choose a Renovation Loan in Singapore?

When choosing a renovation loan in Singapore, it is important to consider factors like the interest rate offered, the length of repayment tenure, and additional fees associated with taking up the loan. Also, ensure that you can meet all requirements for loan eligibility, such as providing proof of contractor engagement and basic documentation. It is advisable to compare renovation loans from multiple banks or financial institutions before deciding on one since all might offer different benefits suited for different types of renovations. 

Conclusion

Regardless of your loan option, it’s important to compare different lenders and their products to find the best deal. With some preparation and research, you can find the loan that best fits your renovation project needs. 

Key takeaways:

  • Personal loans and renovation loans are two popular loan options for financing a home renovation project 
  • Personal loans can be beneficial for larger projects with shorter repayment terms 
  • Renovation loans offer lower interest rates and longer repayment plans, making them better suited for smaller projects with tighter budgets 
  • Consider your budget and project goals to make an informed decision that best fits your needs.  

If you are looking for a loan to fund your home renovation project, you should consider applying for a loan from 365 Credit. At 365 Credit, we offer fast-approval renovation loans to help you finance your renovation project. Request a free quote now to get started.

About 365 Credit Solutions

365 Credit Solutions Pte Ltd is an established licensed moneylender since 2010 (formerly known as FLS Credit and Fu Lu Shou Credit), accredited by the Registry of Moneylenders in Singapore. We specialize in providing personal, payday, bridging, foreigner, business loans to Singaporeans & Foreigners working in Singapore.

 

Our mission is to help make taking a loan a simpler, more understandable process, and to educate our customers about their loan options in the event of an urgent need.

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