HDB Renovation Loan

I don’t know about you guys but during our massive short-listing of Interior Designers (ID), almost all of them could not answer simple questions / concerns about renovation loans.

A search on Google showed that renovation loans in Singapore are capped at S$30,000 per person or 6 times the monthly gross salary. I was concerned because renovations nowadays can cost above S$30,000.

Since none of the IDs could give me a good answer, I decided to approach the banks myself. Now, from my research, I know that Maybank and RHB currently offers the best rates (2.88%).

So for example, a loan of S$30,000 (assuming you earn S$5k SGD a month) under the 2.88% interest over 5 years (60 months) will cost you S$34,320 at the end of the loan period. That’s a whopping S$4,320 in interests! Still, this is much lower than a personal loan which can go up to 18% per annum!

Wait, we’re not done yet. What if your renovation is going to cost S$40,000? Further checks with the banks revealed that you CAN actually submit a joint application with somebody related to you*. The most common type is of course the husband-wife joint application where both parties must submit a list of supporting documents to prove their relationship, their joint-ownership of the house and of course, their income. This way, it is more likely for couples to afford a reasonable renovation.

Before I forget, there is a 1% processing fee charged by the bank on top of interests. This 1% will be deducted from the loan amount so a loan of S$30,000 will see S$300 deducted as processing fee. Don’t forget to budget this 1% as your ID will see a shortfall in the loan amount and ask you to pay cash for it. Ask your ID to include both you and your joint-applicant’s name on the quotation. This quotation, signed by both you and the ID, must be submitted to the bank together with the loan application.

One last thing – most IDs will ask for milestone payments for example:

– S$2000 deposit (To start drawing your 3D diagrams, etc)
– 30% (less deposit) -Upon commencement of work
– 40% (less deposit) – Upon completion of wet works
– 25% (less deposit) – Before commencement of carpentry
– 5% (less deposit) – Upon completion of all works

Do note that the banks will charge you money for each additional cashier’s order that you need. RHB charges S$10 per cashier’s order (1st one is complimentary). Joint-applicants will obviously have two free cashier’s orders but will still need to fork out S$20 for the additional 2.

I hope this article on renovation loan helped you 🙂

* Certain conditions apply – check with the banks!