How To Finance Your Home Renovation – Loan Options & Budgeting Hacks

6 June 2024 | BY

If you’re planning to renovate your home in 2024, here’s a compilation of renovation loan options from major banks in Singapore this year.

Congratulations, you’ve received the keys to your home. Now for the fun part—renovating your house. Time to pull out the Pinterest boards, home design articles, and that TikTok home renovation inspo folder you’ve been saving since forever. If you’re planning on renovating your home in the near future, you’ve come to the right place. Aside from deciding on the aesthetics of your new home, another important task is figuring out how to finance your home renovation.

In this article, we provide home renovation cost estimates for both BTO and resale HDB flats, as well as new and resale condo units. Then, we’ll move to budgeting hacks you can use. Finally, we’ll delve into home renovation loan options and what to pay attention to when figuring out your financing options. 

How much does home renovation cost in Singapore?

BTO flat renovation costs in 2024

Image credit: Craft & Cook

BTO flat type Estimated home renovation cost (2024)
3-room $34,200-$52,100
4-room $52,500-$66,000
5-room $62,000-$70,000

Source: Qanvast

HDB provides new fittings for BTO flats, which can bring down your renovation costs. For instance, the glazed porcelain floor and wall tiles, modern steel gate and laminated timber main door are of good quality, and can fit most aesthetics. In the bathroom, you can expect water-efficient sanitary fittings and concealed floor traps.

On average, you can expect your renovation to take between 8-10 weeks. Still, having a buffer of 2-4 weeks is a good bet—you never know what delays may crop up.

Resale HDB flat renovation costs in 2024

HDB resale flat type Estimated home renovation cost (2024)
3-room $65,000-$88,000
4-room $58,000-$72,200
5-room $78,600-$93,500

Source: Qanvast

Expect to spend more on renovating an HDB resale flat than a BTO, although you might get lucky and find a newly renovated home that requires minimal renovation. 

If not, much of the budget will probably be spent on the kitchen and bathrooms if your resale flat is older. You’ll have to replace bathroom piping, plumbing, and electrical wiring. You may also want to hack down walls and older in-built furniture so your home is designed to your taste. Installing new carpentry, masonry, and flooring might be in order too.

You may be wondering why 3-room resale flat owners tend to spend more on their renovation. These extra costs are typically racked up  of space reconfiguring such as knocking down walls to make the homes feel more spacious. Customising storage solutions to increase space efficiency also adds to the cost.

Condo renovation costs in 2024

Condo type Estimated home renovation cost (2024)
New condo unit $40,400-$54,500
Resale condo unit $77,200-$105,000

Source: Qanvast

Like BTO flats, new condo units come complete with fittings and some in-built furnishing such as bedroom wardrobes and kitchen cabinets, as well as hardware, floor and wall tiles. Depending on the project you bought, the quality of these finishings will vary. 

Image credit: Darwin Interior

The expected renovation duration for new condo units is 8 weeks. For resale condo units, expect your renovation to be completed between 10-12 weeks. Ultimately, the cost and time required to complete your home’s renovation depends on the scope and type of materials you choose.

Home renovation budgeting hacks

Image credit: TheSmartLocal

Renovation costs have only gone up over the years. You want to be able to budget for your home renovation and save money where you can. To help you, we’ve put together this non-exhaustive list of home renovation budgeting hacks. 

When choosing an interior designer (ID)

Image credit: TheSmartLocal

  • Meet at least 5 interior designers to compare quotes. Avoid rushing into selecting any one ID.
  • The lowest quote may not always be the best quote. Read online reviews thoroughly before selecting your final ID, as it’s not uncommon for some IDs to cut corners in order to reduce costs.
  • If you have the time and expertise, consider going only with contractors and designing your home by yourself. Do ensure all contractors are approved by HDB. If not, you may be better off with an ID.

When budgeting for your renovation

  • Try to keep your total renovation budget under 6 times of your monthly household income.
  • Ensure you have a buffer of at least 20% more than your intended renovation budget, in case anything goes wrong.
  • If it comes down to it, you can always renovate your home in parts. Should you have to choose, spend your budget on the kitchen and bathrooms first.
  • Slowly furnishing and adding art to your home will almost always look better than buying everything at one go. Curation is personal and takes time.
  • Consider a laminate or vinyl flooring instead of hacking the tiles.
  • Prioritise your needs over your wants; know there are always alternatives. For example, recessed and cove lights do look nice, but installing many of them can really add up. You can get interesting statement lamps for mood lighting instead.

When buying furniture and appliances

  • Sign up for a credit card to pay for electronic appliances and furniture. Depending on what your credit card offers, you can accrue cashback and miles, and even redeem furniture with your points.
  • Consider going to furniture wholesalers in Johor Bahru. This is great for those on a budget, and those who prefer assessing the quality of furniture in person prior to making a purchase.
  • If you do get your electronic appliances and lighting from Taobao, double check with your ID to ascertain that they are compatible with the wiring and plugs in your home. 

After all that budgeting, you might find yourself in need of financing options. Here’s where home renovation loans step in.

Home renovation loan options in Singapore (2024)

Home renovation loan Interest rate P.A.
Maybank Renovation Loan  From 6.53%
CIMB Renovation i-Financing  From 4.15%
DBS Renovation Loan From 4.88%
DBS Eco-aware Renovation Loan From 4.68%
OCBC 1 Renovation Loan  From 4.75%

These interest rates for home renovation loans are accurate as of 27 March 2024. Do note that these interest rates are not the effective interest rate. You can use an online renovation loan calculator to work out the amount you need, and renovation loan comparison tools to get an estimate. For the latest home renovation loan interest rates and details, check in with the individual banks. 

When taking out a renovation loan, be mindful of the disbursement and processing fees. The disbursement fee is a charge associated with releasing the loan funds to cover your renovation project. For most home renovation loans, you can expect the disbursement fee to be about 1% of your final loan amount.

Based on the loan packages on the market, processing fees can range from $0 to $375. Again, final fees vary across banks. You’ll also want to pay attention to the fine print for late payment fees, cancellation fees, and prepayment fees. 

Who can take out a renovation loan?

Each bank usually has its own set of criteria. In general, you have to be a Singapore Citizen or Permanent Resident, own a property, have a good credit score and fulfil the bank’s minimum income requirement. Most banks have a minimum annual income requirement of $20,000- $30,000. 

Do be mindful of the 55% Total Debt Servicing Ratio (TDSR) threshold. The home renovation loan will count towards your debt obligations. 

What is covered under a renovation loan?

You can only use your home renovation loan for certain renovations. Typically, this is limited to tiling, flooring, painting, electrical works and wiring, and basic bathroom fittings. Again, each bank has a different set of criteria.

If you’re wondering if you can take out a loan from HDB to finance your home renovation, the answer is no. There isn’t a specific loan by HDB for renovation purposes. Think of a home renovation loan as a way to secure the basic renovation works needed━it’s not meant to cover everything.

Alternatively, you can consider a personal loan. Like home renovation loans, the amount you can borrow on a personal loan is usually equivalent to 6 months of your income. Standard Chartered’s CashOne Personal Loan and HSBC’s Personal Loan are some packages you can check out.

However, personal loans typically come with a higher interest rate than renovation loans. That’s because home renovation loans are secured by an existing property that’s being renovated, and are considered to be less risky. As with taking on debt and loans, ensure it makes financial sense for you before inking any deals.

Can renovation loans be paid in instalments?

Yes, you can pay back your renovation loan via monthly instalments. However, most banks have a maximum loan tenure of 5-7 years. 

For those who are wondering how much you can borrow on a renovation loan in Singapore, it really depends. For example, the maximum renovation loan amount for a DBS renovation loan is 6 times your monthly income or $30,000, whichever is lower. Final amounts vary across banks and are subject to their own reviewing processes.

Finance your home renovation

Before you go, we have one last tip: if you’re thinking of financing your property with a bank loan, ask your existing bank for a renovation loan. If you’re an existing customer, you might be able to secure a promotional rate or discount on your home renovation loan. They might even have freebies for you if you’re lucky. 

For more home finance content:

Cover image credit: TheSmartLocal

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