Personal Loan vs Renovation Loan in Singapore (2025): Which Is Better for Home Improvement?

Home renovation is one of the most exciting milestones in life—whether it’s transforming your new BTO, upgrading a resale flat, or giving your condominium a fresh facelift. But as any Singaporean homeowner will know, renovations come with a hefty price tag. From carpentry and flooring to new furniture and appliances, costs can quickly add up to tens of thousands of dollars.

This is where financing comes in. In Singapore, the two most common ways to fund a home makeover are through a renovation loan or a personal loan. While they might seem similar at first glance, there are key differences in how they work, what they cover, and which one suits you best.

In this guide, we’ll break down renovation loans vs personal loans in Singapore, highlighting their features, pros and cons, and when you should consider each option.

Key Takeaways:

• Renovation loans work best for major structural works but come with stricter conditions, such as proof of home ownership and contractor quotations.

• Personal loans may suit smaller budgets or mixed expenses since they’re easier to apply for, require minimal paperwork, and can be used beyond just renovation works, even if interest rates are higher.

• Your borrowing decision affects your Total Debt Servicing Ratio (TDSR), which in turn influences your eligibility for future loans or refinancing.

• Always match your loan choice with your renovation timeline, contractor’s payment schedule, and disbursement plan to avoid delays or cash flow issues.

Personal Loan vs Renovation Loan in Singapore (2025): Which Is Better for Home Improvement?

Overview of Loan Options for Home Improvement

What is a Renovation Loan?

A renovation loan is a financing product specifically created to fund home improvement projects. These loans are tied strictly to renovation works such as tiling, carpentry, plumbing, or electrical upgrades. Funds are usually disbursed directly to your contractor or interior designer based on approved quotations, ensuring the loan is used solely for the intended works.

What is a Personal Loan for Home Renovation?

A personal loan offers far more flexibility than a renovation loan. Because it’s unsecured, you don’t need to submit renovation quotes or invoices to apply. Beyond renovation expenses, personal loans can cover furniture, appliances, décor, or even non-home-related costs if needed. This makes them particularly useful for homeowners who want an all-in-one solution for both renovation works and lifestyle upgrades.

Renovation Loan vs Personal Loan: A Side-by-Side Comparison

Feature	Renovation Loan	Personal Loan
Purpose	Strictly for renovation-related works	Can be used for anything, including renovations
Interest Rates	Generally lower than personal loans	Slightly higher, but flexible
Loan Amount	Capped at renovation costs or income-based limits	Based on income and credit profile
Repayment Tenure	Usually 1 to 5 (sometimes 7) years	Up to 5 to 7 years
Approval Criteria	Requires contractor’s quotation, stricter rules	Requires only proof of income and identity
Best For	Core home improvement works	Flexible spending on furniture, appliances, and extras

Illustrative Example: Monthly Repayments

Let’s say you need a $20,000 loan for your home. Here’s how monthly repayments might differ depending on tenure:

Loan Amount	Tenure	Monthly Repayment (Approx.)
$20,000	3 years	~$650/month
$20,000	5 years	~$420/month
$20,000	7 years	~$310/month

Illustrative purposes only. Actual figures depend on lender, terms, and interest rates.

Total Interest Costs: Why Tenure Matters

The longer the loan, the smaller your monthly repayment—but the higher your total interest paid.

Loan Amount	Tenure	Total Interest (Approx. @6%)
$20,000	3 years	~$1,900
$20,000	7 years	~$4,400

Shorter loans = higher monthly repayments but less interest overall. Longer loans = smaller monthly repayments but more interest in the long run.

When Should You Choose a Renovation Loan?

A renovation loan makes sense if:

• You’re funding major home improvement works (flooring, carpentry, plumbing, electricals).

• You want a loan with lower interest rates.

• You already have contractor quotations ready for submission.

When Should You Choose a Personal Loan?

A personal loan works better if:

• You need flexibility (covering both renovation and non-renovation costs like furniture).

• You don’t yet have a contractor quote but still want financing.

• You want to consolidate multiple needs into one loan.

Can You Combine Both Loans?

Yes, many homeowners in Singapore use both:

• Renovation Loan → for structural, built-in, and contractor works.

• Personal Loan → for add-ons like furniture, appliances, or extra décor.

This approach ensures you enjoy the benefits of a lower-interest renovation loan while still having flexibility through a personal loan.

Eligibility & Documents Checklist

Renovation Loan:

• NRIC / FIN

• Latest 3 months’ payslips OR CPF contribution statement

• Latest income tax notice of assessment (for self-employed/commission-based)

• Proof of residence (utility bill / tenancy agreement)

• Contractor’s quotation

Personal Loan:

• NRIC / FIN

• Latest 3 months’ payslips OR CPF contribution statement

• Latest income tax notice of assessment

  
  

Risks & Responsibilities of Borrowing

Before deciding, keep these in mind:

• Don’t over-borrow: Take only what you can comfortably repay.

• Read the fine print: Understand repayment schedules, late fees, and penalties.

• Check licensing: Only borrow from licensed moneylenders listed on the Ministry of Law website.

Conclusion: Renovating Responsibly

Both personal loans and renovation loans play important roles in financing your dream home in Singapore. Renovation loans offer lower rates but stricter usage, while personal loans provide flexibility for all your needs.

At 1133 Moneylenders, we guide every client through a responsible borrowing process—ensuring you only take on what you can comfortably manage. Whether you’re planning a full renovation or just need extra cash for furniture and appliances, we’re here to help.

Ready to explore your options? Contact 1133 Moneylenders today for a no-obligation consultation.

Renovation loans offer lower rates but stricter usage, while personal loans provide flexibility for all your needs.

FAQs for Home Renovation Loan in Singapore

Q1. What can a renovation loan be used for in Singapore? Renovation loans cover works like tiling, carpentry, wiring, and painting. They do not cover furniture or appliances.

Q2. Can I use a personal loan for renovation works? Yes, personal loans are flexible and can be used for both renovation and non-renovation expenses.

Q3. Which loan has lower interest rates? Renovation loans usually have lower interest rates compared to personal loans, but they are more restrictive.

Q4. Do I need a contractor’s quotation for a renovation loan? Yes, most lenders require a signed contractor quotation to process a renovation loan.

Q5. Can foreigners apply for renovation loans in Singapore? Yes, but eligibility criteria differ—proof of employment and residence is usually required.

Q6. Is it possible to take both a renovation loan and a personal loan? Yes, many homeowners combine both to cover different aspects of their renovation budget.