DBS/POSB Renovation Loan Review: How Competitive are the Banks' Rates?
DBS/POSB Renovation Loan Review: How Competitive are the Banks' Rates?
ValueChampion Rating 
Pros
- Low rates for renovationloans of 4-5 years
- Great for current DBS and POSB home loan customers
Cons
- Not the cheapest renovation loan available
- Not the best rates for short-term renovation loans
DBS and POSB offer the most competitive interest rates for 4 and to 5 year renovation loans and 1-3 year loans of less than S$10,000. However, they charge higher fees than other banks and their interest rates are are less competitive in other circumstances.
| Summary of DBS/POSB's Renovation Loans |
|---|
| Rest rates: 4.88% (DBS Renovation Loan) & 4.68% (DBS Green Renovation Loan) |
| Higher fees than competitors: 1% processing fee + 1% insurance premium |
| Low minimum income requirement: S$24,000 |
| Low minimum loan requirement: S$5,000 |
Table of Contents
What Makes DBS/POSB's Renovation Loans Stand Out to Borrowers
DBS and POSB's renovation loans' rest rates of 3.88% are the lowest interest rates among lenders for 4 and 5 year renovation loans. The banks also offer renovation loans to individuals with incomes as low as S$24,000, which is a lower requirement than many other banks. Finally, DBS and POSB offer insurance coverage to borrowers in the case of death or permanent disability and a relatively inexpensive cashier fees of S$5.
However, DBS and POSB's renovation loans are less competitive for other durations and loan amounts. For example, CIMB offers cheaper rates of 2.98% to 4.18% with tenures of 1 to 3 years, though CIMB does not offer renovation loans of less than S$10,000. Additionally, DBS and POSB charge an insurance fee and a processing fee, making their mandatory fees twice as expensive as other renovation lenders. Therefore, DBS and POSB are only cheaper for longer-term renovation loans.
Summary of DBS/POSB's Renovation Loan
| Maturity | Fees | Interest Rate | Monthly Instalment | Total Cost |
|---|---|---|---|---|
| 1 Year | 2% | 4.88% | S$1,283.29 | S$399.45 |
| 2 Years | 2% | 4.88% | S$657.27 | S$774.36 |
| 3 Years | 2% | 4.88% | S$448.76 | S$1,155.20 |
| 4 Years | 2% | 4.88% | S$344.62 | S$1,541.98 |
| 5 Years | 2% | 4.88% | S$282.24 | S$1,934.67 |
| *Assuming loan of S$15,000 | ||||
Who Can Apply: Eligibility Criteria
To be eligible for DBS or POSB's renovation loans, individuals must be Singaporean Citizens or Permanent Residents of 21 to 65 years old. Successful applicants must earn at least S$24,000 in annual income. Loan amounts vary from S$5,000 to S$30,000 or 6 times monthly salary, whichever is lower.
Other Charges and Fees
DBS and POSB's fees are more expensive than those of other renovation lenders. The banks charge a 1% processing fee and a mandatory insurance premium of 1, while other banks tend to only charge a 1% fee. However, the insurance program can be beneficial as it covers outstanding loan balances for borrowers in the case of death or total permanent disability. DBS and POSB also charge several standard fees for cashier orders, loan cancellation, early full repayment and late payments.
| Fee | Amount |
|---|---|
| Processing Fee | 1% of approved loan amount |
| Insurance Premium | 1% of approved loan amount |
| Cashier Order | S$5, first is free |
| Cancellation Fee | 1% of approved loan amount |
| Pre-payment Fee | 1% of outstanding loan amount |
| Late Payment Fee | S$35 for each month of part thereof |
How to Apply: Application Process
In order to apply for DBS or POSB's renovation loans, applicants must submit documentation detailing of the renovation, proving homeownership, income and relationship to primary applicant in the case of a joint application. To prove their annual income, salaried employees need to submit their latest computerised payslip, salary crediting into a DBS/PSB bank account or their latest 6 months' CPF Contribution History. Self-employed individuals must submit their latest 2 years' Income Tax Notice of Assessment and variable income commission-based employees must submit their latest 12 months' CPF contribution history and their latest 2 years' Income Tax Notice of Assessment.
Other Required Documents:
- NRIC photocopy (front & back)
- Original invoice or quote from contractor, signed by applicants and contractor
- Property tax bill
- CPF Housing Withdrawal Statement
- HDB Letter of Approval
- Sales and Purchase Agreement
- Renovation Permit
- Birth Certificate
- Marriage Certificate
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Stephen Lee is a Senior Research Analyst at ValueChampion, specializing in insurance. He holds a Bachelor of Arts degree in International Studies from the University of Washington, and his prior work experience include risk management and underwriting for professional liability and specialty insurance at Victor Insurance. Additionally, Stephen is a former US Peace Corps Volunteer in Myanmar (serving between 2018-2020), where he continues to provide business development consulting services to HR companies in Asia Pacific.