Renovation Loan Interest Rates: Banks vs Licensed Moneylenders

Whether you’re living alone or with loved ones, the space we call home is sacred. It’s where we relax, play, rest, and form relationships outside of work.

Renovations are a great way of beautifying these spaces and increasing our quality of life. However, it can be expensive and we might have to consider taking out a loan. It is important to consider renovation loan interest rates when deciding on which option to take.

In this article, we compare renovation loan interest rates offered by banks with those offered by licensed moneylenders in Singapore.

Renovation Loan From Banks

In general, some banks charge monthly interest fees based on the outstanding balance, whereas others base it on the total amount borrowed. Also, tenures (amount of time you’re given to repay a loan) given by banks are normally at a maximum of only 5 years, and the maximum renovation loan amount is typically 6 times your monthly wages at a cap of $30,000.

To qualify for a renovation loan from banks, you are usually required to

1. Own a property.
2. Be a Singaporean Citizen or PR.
3. Fulfil minimum income requirement as determined by each bank.
4. Be in a certain age range.
5. Have an acceptable credit score.

Other than these criteria, one other important limitation is that banks normally determine what the loan can be used for. For instance, most banks do not allow the loan to be used for purchasing furniture.

Renovation Loan Interest Rates For Banks

Here are five renovation loan interest rates from popular banks.

1. POSB Renovation Loan

One of the more popular renovation loans from banks, its selling point is its lower-income requirement of $24,000 per annum.

The interest rate starts from 3.88% p.a. for the Green Renovation Loan, up to 4.18% p.a for a standard renovation loan.

2. OCBC Renovation Loan

The OCBC renovation loan boasts a simple online process, with a fast loan approval within 60 seconds and loan disbursements within 5 working days.

The interest rate is at 4.18% p.a. with flexible repayment of up to five years.

OCBC also offers the Eco Care Renovation Loan. This requires your home to be energy efficient as verified by the Tropical Home Energy Efficiency Assessment (THEEA). If you qualify for this loan, you stand to enjoy a lower interest rate of 3.98% p.a., along with other benefits.

3. Maybank Renovation Loan

Maybank’s interest rate is much lower if you are already an existing Home Loan customer.

The interest rate for existing Home Loan customers is at 2.88% p.a.

The interest rate for new customers is at 4.10% p.a.

The application process is fully online and can be auto-filled using your Singpass account, which makes for a seamless process.

4. DBS Renovation Loan

The terms of DBS’s renovation loan are quite similar to POSB.

The interest rate is at 4.18% p.a.

However, if you fulfil the requirements for their DBS Green Renovation Loan (POSB also offers a similar one), the interest rate can go as low as 3.88% p.a.

5. RHB Renovation Loan

RHB’s interest rates are higher than other banks. However, it offers a unique refurbishing loan that most other banks do not.

The interest rate is at 5.80% p.a.

Here’s a table summary of the bank interest rates for renovation loans (p.a.):

Renovation Loan From Licensed Moneylenders

A more flexible renovation loan option is using licensed moneylenders. A reputable moneylender goes a long way in ensuring you are borrowing safely and legally. These loans are generally kinder in terms of requirements, which may sometimes be a hindrance when borrowing from banks.

In addition, renovation loans from licensed moneylenders can be used for a myriad of home improvement works, including plumbing, electrical works, painting, and the purchase of furniture.

Renovation Loan Interest Rates for Licensed Moneylenders

Besides having more flexible requirements, the renovation loan interest rates for licensed moneylenders can be higher than banks, but with equally, if not more flexible repayment terms. Galaxy Credit is one such example. Registered with the Ministry of Law, they provide the best loan deals for customers along with simple, fast approvals.

Most licensed moneylenders offer interest rates of up to 4.0% per month, but Galaxy Credit’s renovation loan boasts a much lower interest rate, starting from 2.27% flat interest per month because the firm understands just how expensive home renovations can get.

With transparent service and professional customer support in mind, you will be assured of a customised loan package that you can channel towards building your ideal home. Talk to a loan expert about your borrowing options today.

About the Author

Weetee Neu

Weetee Neu is a writer based in Singapore. He has written for MediaCorp, SPH magazines, Tripzilla and others.