There’s no getting around it. Renovation in Singapore are expensive. The average cost of a home renovation for a 4-room HDB flat is around $55,000. Many of us are willing to fork out the money in exchange or a dream to spend our lives in. But depending on your circumstances it might not be easy to raise such a large amount, thankfully there are a number of home renovation loan options out there to help you build your dream home.
What Exactly is a Home Renovation Loan?
A home renovation loan is a lot like a personal loan. But because it is being used solely to finance your renovation, there is a much lower interest rate. The loan covers general renovation works like electrical wiring, painting, flooring, carpentry, and fittings – the bank pays the contractor or interior designer directly instead of releasing the money to you.
Home renovation loan tenures typically last around 1 to 5 years and the maximum amount you can loan is $30,000 or six times your monthly salary. In order to qualify for a loan, you have to meet the minimum income requirement of $24,000 a year and provide proof of income, home ownership, and your contractor’s invoice.
Now that you’re familiar with home renovations loans and what they’re for, let’s compare the options to see which banks have the best rates for you?
Which Bank has the Best Rates?
Some banks have different renovation loan rates depending on whether you are a new or existing home-loan customer. In our comparison of monthly instalment rates, we have assumed a loan amount of $30,000 over 5 years as a new customer for the following banks: DBS, Maybank, OCBC and CIMB.
|Bank||Monthly Interest Rate||Monthly Instalment||Total Interest Paid||Other Fees|
|DBS||2.88% p.a. ( Existing home-loan customer)|
3.88% p.a. (new customer)
|$550||$3,052||Handling fee: 1% of loan amount|
Insurance premium: 1% of loan amount
|Maybank||2.88% p.a. (existing home-loan customer) |
4.33% p.a. (new customer)
|$557||$3,418||Handling fee: 1% of loan amount|
|OCBC||4.98% p.a. (exisiting home-loan customer)|
5.38% p.a. ( new customer)
|$571||$4,282||Handling fee: 15 of loan amount |
Processing fee: $200
|CIMB||4.44% p.a.||$558||$3,508||Handling Fee: 1% of loan amount|
* Number are correct as of July 2019
At first glance, DBS’s low monthly interest rates of 3.88% p.a. seems to be the most attractive, but a total of 2% in miscellaneous fees is a significant amount you should take into consideration.
Coming second and third is Maybank and CIMB with rates of 4.33% and 4.44% respectively.
Maybank offers a reduced rate at 2.88% if you are an existing home-loan customer, but also holds the highest requirement with a minimum annual income of $30,000.
CIMB does not offer a preferential rate for existing home-loan customers, instead offering a 4.44% interest rate for a 5-year tenure and a 2.98% interest rate for a 1-year tenure. This means you pay less interest if you are able to repay the full loan over a shorter period of time.
Lastly, OCBC has the highest interest rate at 5.38%. They also have a $200 processing fee on top of the 1% handling fee imposed by all the banks. However, they have the shortest processing time as the loan amount is disbursed just 1 day after approval, which makes them a suitable option if you need the money fast.
I have a Loan, Now what?
Besides taking up a renovation loan, there many other ways you can achieve your dream home without breaking the bank. Look for an interior designer with clearly defined prices so you know how much money you need to prepare up front.
Design 4 space is an experienced interior design outfit offering more than 60 different packages from $6,680 onwards to care to your needs and budget. With more than a thousand completed projects, you can expect nothing but utmost professionalism combined with effective and efficient execution for your home renovation.