What Can a Renovation Loan Cover?

The vast majority of us, Singaporeans, live in HDB flats built a couple of decades ago, which is an issue, as the quality of the construction is starting to make way for age-related problems. Do you live, for example, in Bukit Merah or Kallang? In that case, according to the latest data available, chances are that your dwelling is around 30 years old. No building, no matter the quality, can keep itself without issues for three decades on end, so chances are that in the near future, you will have to start building a contingency fund for unexpected repairs or home improvements.

But here is the catch. While Singapore is a well-developed country, with an infrastructure network that’s pretty much world-class, the high living costs combined with the average rent make it so that the vast majority of us cannot realistically build a sufficient emergency fund. Are you currently dealing with a situation that cannot be postponed? Is your roof leaking, have you lost power, or are you suffering from plumbing problems? Then, if you think about it, your best solution would be to ask for external help. And here is where a home renovation loan provided by an agency like can step in.

How much can you obtain with a home renovation loan? Well, it will depend on your monthly income and the guarantees you are willing to present. But, all things considered, renovation loans are considered to be a specific subset of personal loans, and are therefore self-limiting under the provisions of the Moneylenders Act. In other words, without guarantees, you are permitted to borrow up to six times your monthly wage.

HRLs, at least when contracted from conventional banks, are traditionally quite self-limiting in the way you can utilise the borrowed money. Often, with an HRL obtained from a conventional financial institution, the money can only be used for structural works, plumbing, or renovations of the kitchen or bathroom. Things, however, are a bit different when it comes to our services.

Yes, you can utilise our renovation loans for ample renovations like flooring replacements. But at the same time, with our financial services, you could also, for example, install new kitchen cabinets, buy a new shower cabin, change your sliding wardrobe, and, of course, paint your dwelling. Pretty much anything related to the proper functioning of your dwelling will be included in the renovation loans provided by our agency. Our cash infusions can be utilised to install new lighting fixtures, to renovate some of your exterior decorations, buy new appliances and cover changes in the quota of the contractors you hire.

There are limitations, of course. Renovation loans don’t work exactly like personal, unsecured ones, and therefore can only be utilised for expenses associated with your dwelling. You can’t, for example, use the money for non-home-related purchases, nor can you make use of it for the services of non-registered contractors. With that being said, we are flexible with our credit terms. We serve clients all over Singapore, from Tanjong Pagar to Raffles Place and Orchard, and if you have any questions, you can use the contact form on our website to let us know how we can help you.

Well, at the end of the day, it’s all about the financial benefits. While personal loans are more flexible in their use cases and can typically be obtained with fewer documentation requirements, they are also usually accompanied by slightly larger interest rates, which can add up over time. Renovation loans come with a lower risk than typical personal loans, and therefore, their total interest rates are, for the most part, a bit lower.

The change will not be massive, that’s true. But it’s enough to make a difference. Plus, compared to the majority of personal loans, the sums involved in renovation loans are more extensive, as renovation costs, at least in Singapore, are naturally higher than the purchase of most goods and services. While most personal loans cap at six times the monthly income of the borrower, with a renovation loan, this cap will be eliminated, as long as you are also willing to provide tangible guarantees that accompany your application. The same is true for personal loans, that’s true. But with a renovation loan, the approval process can, in most cases, be accelerated.

Plus, most repayment tenures associated with renovation loans are longer than is the case with conventional, personal loans, and most often than not, they are more advantageous if you are looking to borrow larger sums without the hassle of going for conventional bank services. If you want to make affordable monthly repayments and you are looking for direct contractor financing, renovation loans are a good option. However, if you are more interested in flexibility, personal loans are probably more on your radar. Both choices work, however, and are characterised by affordable interest rates that can positively influence your CPF strategies.