As time passes, change is inevitable. Apparently, this has been much easier to be noticed given the impacts of the global pandemic. Despite the challenges that have occurred amid the crisis, many have rather spent their time exploring new things and rediscovering other stuff while in isolation. This includes prioritizing the environment they are in, specifically, their homes.
While there are a variety of things one can consider doing while in quarantine, there may be some who are rather keen into making upgrades inside their properties. Unfortunately, people often cannot afford big projects like this without applying for a home renovation loan.
As it indicates, home renovation loans are types of loan wrapped into a mortgage loan for renovating, remodeling and repairing a house. It can be in the form of a refinance of your current mortgage with a cash payout for improvements, a home equity loan, HELOC, credit card and/or a personal loan.
Costs and Fees for Home Renovation Loans
It has been revealed that the average renovation cost of a resale HDB is around $67,000, while a resale condo will cost around $82,000. Meanwhile, a new HDB will be around $44,000 to renovate, a new condo, on the other hand, may range around $39,000.
- Resale HDB: Around $67,000.
- Resale condo: Around $82,000.
- New HDB: Around $44,000 to renovate
- New condo: Around $39,000
Breaking Down Home Renovation Costs for a 3-Room HDB Flat
For a clearer view of how much home renovations will likely cost. Assuming you own a 70 sqm 3-room BTO flat with 2 bathrooms and would like to renovate each room. With some hypothetical scenarios here’s a rough estimation of how much it will be:
- Living room renovation costs: $2,100 – $7,900
If you’re content with the size of your living room and don’t want to do much drastic work to the partitions or ceilings, floorings could be upgraded with changing tiles.- Moderate masonry: $1,300 – $3,000
The work includes adding new tiles, post-hacking touch-ups, and regular construction of your bookcase base. - Light carpentry: $200 – $3,400
Most likely, every built-in feature needs light carpentry. Remember that cost will vary depending on sizes.
- Moderate masonry: $1,300 – $3,000
- Kitchen upgrade costs: $8,900 – $23,200
Whilst your area is small, recreating a spacious kitchen is likely the plan. Here, you will redo it so it looks cozier, with lots of space-saving features, good lighting, built-in cabinets, and a nice tile backsplash.- Moderate masonry: $1,300 – $3,900
This is necessary for a regular construction of appliance and cabinetry bases, and post-hacking fixes. - Moderate plumbing: $200 – $500
This involves renovating and/or installing 2-3 water fixtures like your kitchen sink, taps, piping, heater storage, and water filtration systems.
- Moderate masonry: $1,300 – $3,900
- Master bedroom renovation costs: $11,500 – $44,600
To achieve a hotel-room vibe space with compromising your storage, you’re thinking of having a platform with steps that lead to the bed. Each step will have built-in drawers. This would also need custom built-in cabinets to maximise the space.- Extensive carpentry: $7,500 – $33,700
Building the custom platform bed and storage will need extensive design and construction. - Moderate ceiling and partition: $600 – $1,100
This involves the regular renovation of home fixtures, including box ups, partial partition walls, pelmets and partial L-box false ceilings with lighting. - Spare bedroom renovation costs: $600 or less for basic work
To save on costs, you don’t want massive work done in the spare bedroom. All you need is a fresh coat of paint and better lighting to redo the space on your own.
- Extensive carpentry: $7,500 – $33,700
- Bathroom renovations: $1,300 – $2,600
- Light hacking: $100 – $500
The work will likely involve dismantling one fixture like the sink to make room for the extra storage space you’d like. Only light hacking will be necessary. - Moderate cabinetry: $1,200 – $2,100
A regular construction of one top-hung mirror or vanity storage cabinets will require moderate cabinetry.
- Light hacking: $100 – $500
| Renovation | Cost |
| Living room | $2,100 – $7,900 |
| Kitchen upgrade | $8,900 – $23,200 |
| Master bedroom | $11,500 – $44,600 |
| Bathroom | $1,300 – $2,600 |
| Total | $23,800 – $78,300 |
Home Renovation Loan Options
While there are different types of home renovation loans, it’s vital to fully understand how they all differ so borrowers and applicants can determine which plan fits their needs. Here we have listed down the options in Singapore and each of its features:
1. Home equity loan / HELOC
This deal is a fixed-rate, lump-sum loan with monthly payments that stay the same for the loan duration. HELOC, usually, has a credit limit and revolving balance which primarily works for homeowners who have several large payments due over time on a big home improvement project.
With either choice, you’re pledging your home as collateral, meaning that if you don’t make your payments, you could end up losing your home.
- Home equity loans and HELOCs’ interest rates are normally lower than they are on unsecured personal loans.
- Equity loans may have upfront fees, such as application or loan-processing fees
- With HELOCs, you can pay interest only on the amount you withdraw.
2. Cash-out refinancing
This allows homeowners to refinance their mortgage for a higher amount than their previous mortgage, based on how much equity they obtain, and take out the difference in cash. Similar to home equity loans and HELOCs, cash-out refinances mandate people to use their home as collateral.
This plan is ideal should you can get a lower rate than what you’re paying on your current mortgage. A lower interest rate and an increase in home value as a result of renovations are great long-term benefits.
- The loan is based on current home value, not post-improvement value.
- There are no restrictions on the use of money.
- You’ll need at least 20 per cent equity in your home to qualify for cash-out refinancing.
3. Credit card
Should you have very healthy credit and a less expensive project in mind, you can utilize a credit card with a promotional no-interest period as an alternative to a full renovation loan.
Note that isolating your project costs on a separate credit card will make it easier to keep those expenditures separate from your usual spending, while a no-interest deal will minimize the cost of borrowing the money.
- It’s guaranteed easy to overspend with a credit card.
- You can consider applying for a card that offers a 0% intro APR period to save money on interest.
- If you’re applying for a new card, some offer sign-up bonuses which can easily go towards housing-related improvement purchases over time.
4. Personal loan
This is an option for those who cannot or do not want to tap home equity- a personal loan from a bank, credit union or licensed moneylender.
Unlike a refinance or home equity loan, this deal is unsecured, thus it is not required to use your home or any other asset as collateral. Loan eligibility, on the other hand, is based on your credit score, income and financial history.
Naturally, consumers with “very good” FICO credit scores of 740 and above get the best interest rates on personal loans, which can be below 6 per cent APR. While some lenders extend personal loans to consumers with credit scores as low as 580, the rates on those tend to be much higher.
- The funding can be available immediately.
- Flexibility is guaranteed as the loan can be used for almost any purpose.
- There is no home appraisal required.
How to Choose a Home Renovation Loan
It is certain you can consider borrowing money for your home renovation or upgrades if you’re confident that the project will either reduce your long-term costs or increase the value of your property.
Should you be aiming to improve the value of your property for selling, keep in mind that ensuring you’re putting your money where it counts is vital.
- Be aware of the risks and what to watch out for. There’s a bigger threat of defaulting on this deal when you have less money invested in your property.
- Be mindful of the upper range of home sale prices in your vicinity. Investing too much in your remodelling can also be a problem. Moreover, it’s best if you don’t rush in reconstructing.
- Consider meeting with several moneylenders. Know the best available rates, and remember that remodels often end up being more expensive and time-consuming than you might originally think of.
To avoid mishaps and to easily weigh which deal you can avail in the future, here’s a list that is based on the best rate and lowest fees:
| Interest Rate | Processing Fee | Admin Fee | Per Month | |
| Standard Chartered CashOne
|
3.48% | 0% | 0% | $391.33 |
| RHB Renovation Loan Monthly Rest
|
4.18% | 1% | 0% | $369.96 |
| Maybank Renovation Loan Monthly Rest
|
4.2% | 0.75% | 0% | $370.14 |
| OCBC Renovation Loan Monthly Rest
|
4.18% | 0% | 1.50% | $369.96 |
| CIMB Renovation-i Financing
|
4.2% | 1% | 0% | $370.14 |
1. Standard Chartered CashOne
- Get your loan disbursed in your account within 15 minutes.
- Borrow up to four times your monthly income, subject to a maximum loan amount of S$250,000
- Enjoy interest rates from 3.48% p.a.!
- Note that the rates provided to you are customised and might differ from what is displayed here.
- Enjoy 0% interest rates for 1-year loan tenure, with 4.5% processing fees that will be deducted from the total disbursed loan.
This deal is open for Singaporeans/PRs aged 21-65, who are salaried, commission-based or self-employed with an annual income of $20,000.
2. RHB Renovation Loan Monthly Rest
- RHB Renovation Loan customers can take an additional furnishing loan.
- Borrow up to six times your monthly salary.
- Loan tenure of up to five years.
This deal is open for Singaporeans/PRs aged 21-55, who are salaried or self-employed with an annual income of $30,000.
3. Maybank Renovation Loan Monthly Rest
- Borrow up to six times your monthly salary or $30,000 whichever is lower.
- Loan tenure of up to five years.
- Attractive interest rates.
This deal is open for Singaporeans/PRs aged 21-55, who are salaried or self-employed with an annual income of $30,000.
4. OCBC Renovation Loan Monthly Rest
- The only bank in Singapore to allow third-party borrowers.
- Loan disbursed one working day after approval.
This deal is open for Singaporeans/PRs aged 21-59, who are salaried or self-employed with an annual income of $24,000.
5. CIMB Renovation-i Financing
- Borrow up to six times your monthly salary or $30,000 whichever is lower.
- Loan tenure of up to five years.
- Attractive interest rates.
This deal is open for Singaporeans/PRs aged 21-55, who are salaried or self-employed with an annual income of $24,000.
6. Alternative to renovation loan: Raffles Credit.
- Raffles Credit Personal Loan has been deemed one of the most flexible deals available in Singapore. Most borrowers use this plan for their home renovation projects.
To avail its personal loan, you must only be an 21 years old Singaporean/PR resident who’s a regular employee with a source of income above $2,000 monthly. While, for Foreigners/Expats working in Singapore, you must have regular employment or a source of income above $3,000 per month.
Which Is the Best Renovation Loan?
Borrowers can consider choosing banks if they plan to avail Credit Card or Personal Loans for their renovation projects. It is worth noting that some of them do not offer HELOCs or Cash-out refinancing unlike licensed moneylenders in Singapore.
Things to Consider Whenever Availing Home Renovation Loans
Before availing that loan you’re planning to get. There are a couple of things a borrower must keep in mind. These are:
- Make a planned budget for your home upgrade. This enables you to prepare and avoid running short on cash prior to beginning your fixes.
- Consider the return as an investment. Make sure that your renovation activity will benefit you in the future by helping in increasing its value.
- Get the right funding option. Shop around and explore choices carefully. There is a wide range of plans for this deal and may come at different costs depending on its interest rate and loan tenures.
- Secure home renovation permits. This will aid you in protecting your property as well as your safety.
- Research on and for credible contractors to get the best and safe estimates in town. As those estimates roll in, check its references and ask about their credentials. At a minimum, ensure each contractor is properly licensed to do the work on your home. Remember that an effective contractor will guarantee the work and offer a warranty.
The Bottom Line
Whatever the type of Home Renovation Loan a borrower is likely to get, it will all boil down to which one best fits and ideally caters to their demands and needs. Thus, this will depend on each interest rate/s, repayment and the loan tenure. While it is given to spend a huge amount of money for the fixes and upgrades, it is vital to be mindful that these would all be worth it if an owner successfully increases its property value upon renovation.
Moreover, if you’re interested in availing Raffles Credit Renovation Loan for your future house upgrade and remodeling, you can easily apply by reaching them at 6235 1788. An online form can also be filled out from the website. Upon confirmation of your application, you will be asked to come to Raffles Credit’s office to customize your loan plan.
Rest assured you can instantly get your borrowed cash as soon as the loan agreement has been discussed and signed!
