What Can I Use A Renovation Loan For & How Do I Apply

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What Can I Use A Renovation Loan For & How Do I Apply

April 5, 2022

Are you interested in renovating your house but don’t have the cash?

A renovation loan can help you finance your home improvement project. These loans have lower interest rates than personal loans to save money on your monthly payments.

At Credit Thirty3, homeowners can borrow up to $50,000 for their home renovation loan!

With a renovation loan, you can do wonders in your home. You could remodel your kitchen, add a new bathroom, or even build an addition to your house. The possibilities are endless!

Keep reading the article below to find out what you can use a renovation loan for and how to apply.

Renovation Loans Vs. Personal Loans

There are two main types of loans that can be used for home renovations: personal loans and renovation loans.

Of course, you can use your savings, but that’s not always a smart choice. You need your emergency funds and savings intact in case something unpredictable happens.

Imagine losing your job or facing a medical emergency that leaves you unable to work.

Banks in Singapore might not approve your loan, fearing you might not repay them. Alternatively, you may obtain a smaller amount with higher interest.

Thus, it’s better to hold onto those savings.

Personal Loans

A personal loan is a type of unsecured loan that you can use for all sorts of purposes – including renovating your home. The advantages are:
You can obtain a larger amount, up to $250,000 or 4-10 times your monthly income at banks in Singapore. If you don’t qualify for a bank loan, licensed moneylenders in Singapore can disburse loans up to six times your monthly earnings.
You can use the personal loan for anything you want. You’re not limited to specific changes inside your home; you can also purchase decorations, furniture – and even a bottle of wine when you finally finish with your changes.
You have an installment plan. This plan keeps you accountable so that you can become debt-free fast. It’s much better than using a credit card, whose payments are easy to overlook until you’re swimming in debt.
You can use it for emergencies. Some renovations require quick action – for example, your pipes bursting. Emergency personal loans are fast and versatile; you can use them to repair your pipes and replace ruined furniture.

Renovation Loans

A renovation loan is crafted explicitly for home renovations. Advantages include:
– Lower interest rates and thus, more affordable installments
– Larger loan amount up to $50,000 and more
– Convenient tenures up to five years
– More approval chances compared to personal loans, even if you have a low credit score

On the downside, you can’t use a renovation loan for anything you want. Even home improvements related to renovations are excluded from a renovation loan’s scope.

What can you use that renovation loan for, though?

Read the following section to find out.

What Can You Use a Renovation Loan for in Singapore?

Renovation loans are less versatile than personal loans, although their interest and approval rates are better. So, you have to be prepared for these constraints:

#1 You can only obtain $30,000

That sum is constraining compared to the $250,000 you can access with a personal loan. Here are some renovations you can do in Singapore with this amount in one room:

  • Extensive hacking: $3,300
  • Extensive masonry: $21,500
  • Light carpentry: $2,900
  • Moderate ceiling and partition: $700

The sums above add up to $28,400.

Thus, you will need more than one renovation loan to cover the work done in other rooms. Alternatively, you can:

  • Use the renovation loan to pay for the things you need to do immediately, and:
  • Take up other renovation loans for not-so-necessary remodelling, or:
  • Consider a personal loan along with your initial renovation loan.

Pro tip: Renovation loans are cheaper than personal loans. For example, a renovation loan’s EIR can be 5% p.a. Conversely, personal loans’ interests can get up to 4%/month.

#2 You can only renovate your home

There are several conditions to get a renovation loan in Singapore. One of them is:

  • You have to own the property you’re trying to remodel, or:
  • You must be the homeowner’s family member and have express consent for these renovations.

Thus, you can’ use a renovation loan to improve a rented apartment. Instead:

  • The owner has to undertake that loan themselves, and you can reimburse them, or:
  • You can consider a personal loan.

Your rental agreement should regulate these renovation-related scenarios, so finding a solution is easier. The real problem is when you’re trying to surprise someone with a gift remodelling or when you want to renovate an apartment you haven’t bought yet.

#3 Some remodelling work isn’t included in your renovation loan

The renovation loan you take gets transferred into your contractor’s account. They can use this money for:
– Hacking: hacking, rebuilding, or plastering walls
Masonry: flooring, tiling, and wet works
Carpentry: personalised solutions for built-in wardrobes, cabinets, or storage features
– Ceiling & Partition
– Plumbing Works
– Electrical Works
– Painting
– Cleaning & Polishing

As such, your renovation loan doesn’t see the inside of your bank account. That means you can’t use these funds for additional remodelling that completes a renovation, including
– Home decorations
– Accessories (curtains, carpets, covers, etc.)
– Appliances
– Furniture

Pro tip: If you need cash for decorations, appliances, and furniture, you can negotiate with your financial providers. Some licensed moneylenders in Singapore may approve your extra conditions. Alternatively, you can consider a personal loan to complete your home’s makeover.

In Singapore, you are likely to apply for a renovation loan to:
– Repair a roof
– Fix floors
– Repaint dirty or cracked walls
– Add a baby room or an office into your apartment
– Transition to an open-plan apartment
– Repair broken pipes or leakage
– Fix your electrical system
– Add cabinets
– Build a fence or a patio

How Do You Apply for a Renovation Loan?

The application process for a renovation loan is easy. In fact, applying only takes 3 minutes!Most financial providers in Singapore have user-friendly and intuitive websites.

In most cases, it’s just a matter of:
– Clicking on that “Apply here” button
– Logging in with your SingPass details to upload the necessary paperwork
– Waiting for 15 minutes to an hour to get a reply

However, there are many steps you have to take before applying for a renovation loan.
You need to draft a budget. Don’t apply for a renovation loan without working out all the details with your contractor. You should have a good idea of what you want and how much you’re ready to spend. Remember that even if you take a loan to cover your expenses, you must reimburse that loan’s installments every month.
You need to check different loan providers. Firstly, you must be sure you’re picking the right option, which means ensuring that:
They offer convenient options. A renovation loan from a bank may have lower interest, but your application may be rejected if you have an income below $20,000 or if you’re not 21-65 years old. By contrast, licensed moneylenders like Credit Thirty3 have higher approval rates and customisable loans with affordable installments.
Your loan provider is legitimate. Check MinLaw’s list of licensed moneylenders if you’re not taking a bank loan.
Their customer support is good. Read several customer reviews on forums and platforms unrelated to that lender’s website, so they can’t curate the comments.

Need the best renovation loan in the market?

Credit Thirty3’s RenoLoan is your best choice because:
– The cash is disbursed to you, not your contractor.
– You get quick approval within 24 hours.
– There’s no lock-in period.

Apply for a fast approval renovation loan here!