Home Reno Loan Interest Rate Singapore

The First-Time Home Owner’s Guide To Home Renovation Loans

6 min read

Every time I have friends over at my place, someone will definitely ask, “Eh, your place damn nice sia… How much is your home reno ah?”

HDB Apartment Living Room
Pictured above: Ma crib.

And it usually plays out like this:

  • I give them the numbers
  • Their jaws drop
  • I explain what the normal price is like for most home renovations
  • Their jaws drop even further

Then they start thinking about how they’re going to afford it when they finally apply for their own HDB BTO.

But this got me thinking: “If my friends have questions about home renovation because they’ve never gone through this experience before, I’m pretty sure someone out there in the Seedly community would have the same question too…”

True enough:

Home Reno Loan Seedly Q&A

This is a very important question for most Singaporeans to consider, especially since the majority of us will end up calling an HDB flat home in the foreseeable future.

TL;DR: Best Home Renovation Loan Interest Rates 2019

Looking to renovate your home?

  • Lowest interest rate for customers with an existing home loan or mortgage: DBS or Maybank at 2.88% p.a.
  • Lowest interest rate for new customers: DBS at 3.88%
  • Lowest processing fee: OCBC at $200 flat (everyone else is 1% of approved loan amount)
  • Lowest minimum income requirement: DBS at $12,000 per applicant, for joint applications

Why Am I Buying The HDB Flat?

Before we talk about home renovation and home renovation loans, you need to consider why are you buying the HDB BTO in the first place.

1) Buying To Sell

Home To Sell

Are you planning to buy the HDB flat, hold it for its Minimum Occupation Period (MOP) then sell it in hopes of upgrading to, say, a condo?

FYI: for an HDB flat, you must occupy it for a minimum period of five years before you can sell the flat in the open market.

If yes, then you wouldn’t want to spend so much on renovation.

2) Buying Your Forever Home

Forever Home

Are you planning to buy the flat and make it your ‘Forever Home’?

Then you’ll probably want to spend a little bit more money to make it nicer since you’ll be living in it for a long time.

View Of Kitchen And Nook
Pictured above: Yes. There are plants in my home. And they’re EVERYWHERE…

How Much Money Do I Need For Renovation?

This is highly subjective and dependent on the aesthetic that you’re going for.

1) Buying To Sell

If you’re planning to sell the flat in a couple of years, then you wouldn’t want to pour too much money into it. But hey, you’ll still need to live in it in the meantime so you’ll probably need to do some minor renovations.

Let’s say you wanna go budget and don’t really care about creating a “dream home”. Then maybe you’d like to consider opting in for HDB’s Optional Component Scheme (OCS).

What the OCS offers will differ between housing projects and can cost anywhere from $5,000 and up. For reference, the OCS for my 4-room HDB BTO (in a relatively mature estate) that was completed in 2017 costs $8,000 to $9,000 – depending on the types of fitting you choose.

According to HDB, this is what a 3-room, 4-room, 5-room, and 3Gen flats’ current OCS will include:

OCS Optional ComponentsSpecifications
Sanitary fittings and internal doors

  • Wash basin with tap mixer

  • Shower set with bath/ shower mixer

  • Doors for bedrooms and bathrooms

Floor finishes

  • Living/ dining room

  • Bedrooms

Basically, it’s the bare minimum you need to make a house liveable because your flat will probably look like this when it’s brand new:

Living Room Before Reno
Pictured above: Not ideal for living in, yet.

Unless you appreciate raw concrete floors and somehow don’t need a functioning shower and toilet…

Winnie The Pooh In Disbelief
Source: knowyourmeme

Also, I’m not disparaging the quality of the finishes but the ones I’ve seen for my project were not the best – in my opinion.

Another point to note is that you have to decide if you want to opt-in for OCS when selecting your flat. And that’s a good three to five years before you actually see your place.

I’ve had many friends who opted for the OCS, only to change their minds after getting their keys and seeing the flat firsthand (Spoiler alert: they didn’t like what they got).

This means extra costs involved to overlay tiles on top of the existing OCS floors. Or paying to get rid of the OCS shower set, AND buying a new one, because your partner cannot stand how fugly it looks next to their Aesop shampoo bottles.

Ken's Master Bedroom Toilet
Pictured above: Things which complement Aesop bottles

2) Buying Your Forever Home

Congratulations. ?

Now comes the hard part: saving and budgeting.

If you plan on creating a home with built-in carpentry like kitchen counters and wardrobe cabinets, floors with homogeneous tiles, and maybe get some electricals and wiring done…

Basic stuff really.

Be prepared to set aside at least $40,000 (this is based 4 room BTO reno prices which my friends have paid). For reference, the renovation for my place was more than $60,000.

Ken's Home Living Room
Pictured above: Toldja about the plants.

Heck, just doing the floors alone will easily set you back something like $10,000. And I’m not even talking about using premium tiles that are handmade in a clay oven in some sun-kissed Italian countryside.

You can definitely achieve a lot for lesser depending on what you prioritise.

But I’ve seen what ‘lesser’ can get you, so do yourself a favour and at least find a contractor or ID who you really trust or has really good after sales service – these qualities will naturally command a higher price.

Should I Take A Home Reno Loan?

For those of you who are hyperventilating and wondering where you’re going to find $40,000 especially with a wedding and the downpayment of the flat to pay for.


Here’s a quick look at the various bank home renovation loans available on the market right now:

 CIMB Renovation LoanDBS Renovation LoanMaybank Home Renovation LoanOCBC Renovation Loan
Interest Rate4.44%
  • 2.88% for existing Home Loan customers

  • 3.88% for new customers
  • 2.88% for existing Home Loan customers

  • 4.33% for new customers
  • 4.98% for existing Home Loan customers

  • 5.38% for new customers
  • Loan Tenure1 - 5 years1 - 5 years1 - 5 years1 - 5 years
    Processing Fee1% of approved loan1% of approved loan1% of approved loan$200
    Loan AmountUp to $30,000 or 6 times monthly salary, whichever is lowerUp to $30,000 or 6 times monthly salary, whichever is lowerUp to $30,000 or 6 times monthly salary, whichever is lowerUp to $30,000 or 6 times monthly salary, whichever is lower
    Minimum Annual Income$24,000$24,000 (single)
    $12,000 (joint)
    • Lowest interest rate for customers with an existing home loan or mortgage: DBS or Maybank at 2.88% p.a.
    • Lowest interest rate for new customers: DBS at 3.88%
    • Lowest processing fee: OCBC at $200 flat (everyone else is 1% of approved loan amount)
    • Lowest minimum income requirement: DBS at $12,000 per applicant, for joint applications

    What Can I Use My Renovation Loan For?

    Just so we’re clear on what you can use your home renovation loan for, here’s a list for reference:

    • Carpentry such as building and installation of wardrobe cabinets and cupboards
    • Electrical and wiring
    • Fittings such as bathroom heaters
    • Flooring and tiling
    • Painting the walls
    • Structural alterations (like hacking down of walls to make certain living spaces larger)
    • Works on external parts of the property, including roof or fences

    How Much Renovation Loan Can I Get?

    For all the home renovation loans listed, the maximum is $30,000 or 6 times your monthly salary, whichever is lower. So if we’re looking at the $40,000 that I projected for renovating your Forever Home, you’re actually $10k short.

    You can probably loan that amount too but it’ll come with a much higher interest and you also have to take note of your Total Debt Servicing Ratio.

    So… Should I Still Take A Home Reno Loan?

    There are two schools of thought:

    money bag and hand

    1) Take The Home Reno Loan

    Take the loan if you believe that you can grow your money at a much faster rate than the interest charged. Looking at the market rate now, loan interest usually ranges between 2.88% to 5.8%, with a tenure of 1 to 5 years.

    Basically, this will depend on how confident you are at beating the prevailing rates when you apply for a home renovation loan.

    The fact that you would like to do up your house nicely is also a valid reason, albeit within a reasonable budget of course. Because technically, this would be more of a want than a need.

    Piggy Bank

    2) Or… Start Saving Now

    I didn’t take a home reno loan because my investment horizon is way longer and I wanted to only spend what I could afford. Call me old fashioned or conservative but I didn’t want the nagging feeling of owing the banks more than I have to.

    So how did I do it? I started early. 5 years early to be exact – remember that I said I collected the keys to my home in 2017?

    When my wife (then girlfriend) started her first job, we decided that we would each put $1,000 aside every month. At that point, we decided that this amount would be saved for our future.

    Naturally, we wouldn’t have known how our relationship would work out, but it’s an amount that we decided is good enough. The caveat being this was for a future, with or without the other individual: 5 years x $2,000 = $120,000.

    With this amount, we had more than enough to cover her university school loan, our wedding, our honeymoon, and of course, our home reno.

    The more investment inclined readers will point out that it’s a lot of money which could be put towards growing a portfolio, and that’s true.

    But at the same time, nothing beats having a peace of mind when it comes to paying for big-ticket items like these.

    Building Your Dream Home

    Whether you decide to take a home reno loan or not, have a talk with your partner, and work out a ballpark figure for how much you’ll need for:

    • Your BTO down payment (assuming that you take a bank loan unless you die also sure take the HDB loan)
    • Your wedding (could just be a ROM)
    • Your budget for home reno (you can even walk into an agency and ask for a quote to get a feel for how much you need; it’s free)

    Because once you have a good gauge of all these related costs, you’ll have a better idea of how to save up for it, or whether you really need a home reno loan.

    An even better thing that will come out of having this conversation, is that as a couple or maybe even if you’re buying a home as an individual, you’ll have one of the biggest money talks in your adult life and create a very real and tangible goal to work towards.

    Have more home renovation loan related questions? Why not ask the Seedly community?

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