Client: Licensed Moneylender Singapore | Title: Renovation loan interest rates for banks vs licensed money lenders

Whether you’re living alone or with loved ones, the space we call home is an important one. It’s where we relax, play, rest, and live most of our lives outside of work. To beautify our abodes and increase our quality of life, we often look towards renovations. But renovation is expensive and we often have to take loans; we thus have to carefully consider renovation loans and renovation loan interests. 

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

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

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

Own a property.
Be a Singaporean Citizen or PR.
Fulfil minimum income requirement as determined by each bank.
Be in a certain age range.
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.

Here are six renovation loan interest rates for well-known banks.

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 for existing loan customers is at 2.88% p.a. 

The interest rate for new customers starts at 3.88% p.a.

Should you qualify for their Green Renovation Loan, the interest rate can be as low as 2.68% p.a.

2. OCBC Renovation Loan

The OCBC renovation loan boasts a simple process, with the loan transferred to your account 1 day after approval.

The interest rate is at 4.18% p.a.

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. May Bank Renovation Loan

As with POSB, May Bank’s interest rate is much lower if you are already an existing customer. 

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

The interest rate for new customers is at 4.1% p.a.

4. DBS Renovation Loan

DBS’s renovation loan is quite similar to the other banks.

The interest rate is at 3.88% 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 2.68% 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 5.8% p.a.

If you are not satisfied with the interest rates or other factors like repayment terms, licensed money lenders in Singapore might just offer a more attractive and fully legal option.

Consider Galaxy Credit. Galaxy Credit is a licensed money lender that is registered with the Ministry of Law. It is committed to getting the best loan deals for its clients, and offers a quick and streamlined process for its loans.

Galaxy Credit’s renovation loan boasts a much lower interest rate of starting from 2.27% flat interest per month because the firm understands just how expensive home renovations can get.

But that’s not all. The loan can also be used for purchasing furniture, which most institutions do not allow. In addition, Galaxy Credit assures transparent and professional customer service that will carefully assess your loan amount and finances, eventually reaching a customised package for you. 

You can be sure that when it comes to building your dream home, Galaxy Credit offers loans with the most freedom and the least worry.

For borrowing options or financial insights from one of the most trusted moneylenders in Singapore, visit Galaxy Credit now.

Compound interest is the addition of interest to the principal sum of a loan when it is not repaid, the methodology is called interest on interest.  To understand this, think of a loan balance as two key components – the principal amount and the interest incurred from the loan.  The lender will apply the agreed interest on the loan balance and the interest incurred to calculate the subsequent year’s interest payment

To illustrate this, let’s use an example of a S$10,000 loan in Singapore at 10% interest per annum.  If the loan is not repaid by the end of the first year, the total amount owed would be S$11,000.  At the end of the second year, the new balance would be S$12,100.  The S$1,000 of interest incurred in the first year has incurred its own interest of S$100!

While compound interest can be a good thing for earning on deposits, it is not the same if it is used on loans.  Compound interests can get expensive for borrowers and when a loan is not well managed, they can end up owing a lot more money than they initially intend to.

First and foremost, the Annual Percentage Rate (APR) is not the same as the interest rate.  The APR is always higher than the interest rate because it includes all fees such as broker fees, closing costs, rebates, and discounts; costs that are associated with procuring the loan.  That said, it is good to note that while the interest rate determines the cost of borrowing money, the APR can more accurately provide the total borrowing cost. 

So, when looking for a legal loan in Singapore, between two offers that present the same nominal rate and monthly payments, choosing the loan package with a lower APR will usually require lesser upfront fees and offer a better deal.

Understanding the different types of interest rates can be complex, this is why it is important to find a licensed money lender who can provide reliable advice and competitive rates when you need a loan to fund your projects.  At GalaxyCredit, we offer a wide selection of loans that cater to individual and enterprises’ needs.  Contact us for a free consultation now.