‘Stress followed me every day’: How to finance home renovation without breaking the bank

SINGAPORE – Alvin (not his real name) chalked up almost $96,000 in loans and credit card debts to renovate his four-room Build-To-Order (BTO) flat in 2023.

The renovation started off with a clear plan but, along the way, Alvin got enthusiastic. 

He started to spend more on lighting, furniture and appliances, and all the little extras to make his home feel complete.

“At the beginning, it didn’t feel like debt. It felt like building a home,” he said.

Alvin took loans amounting to as much as $50,000 from Standard Chartered Bank, CIMB and DBS Bank. 

The rest of his purchases were funded by the instalment plans on his credit cards. 

“It felt like a smart way to spread out the costs,” he said.

“What I didn’t fully realise was that while each instalment looked affordable on its own, together, they created a monthly commitment that kept growing until it became overwhelming.”

Alvin took on extra work, on top of his job, to cope with the repayments.

However, no matter how hard he worked, he struggled to meet his financial obligations of about $2,000 a month. 

“The stress followed me every day, quietly at first, then constantly,” he recalled. 

Alvin finally approached Credit Counselling Singapore, which helped him restructure his debts.

Currently, he pays $1,100 every month and will have to do so over the next eight to 10 years.

“It didn’t erase the debt, but it gave me something I hadn’t felt in a long time – breathing space,” he said.

Looking back, Alvin said he was chasing the idea of a “perfect home” and overstretching his finances.  

“If I could do it again, I would set firmer limits and respect them,” he said, adding that it is alright to settle for what is practical and within his means.

Alvin’s experience is a cautionary tale for the many home owners planning renovations.

In Singapore, home owners can take renovation loans, but the quantum is capped at $30,000 or up to six times their monthly income, whichever is lower. 

The loans are restricted to fittings and permanent fixtures, including tiling, carpentry, plumbing and some hacking works.

Jenn Ong, group head of retail at GXS Bank, said some consumers take multi-purpose personal loans, such as the GXS FlexiLoan, to fund their home renovation as well.

She added that personal loans, unlike renovation loans, give consumers the flexibility to use the funds however they wish – on design and decor, furniture or home appliances.

Most banks disburse personal loans in a single lump sum. In contrast, the GXS FlexiLoan functions like a credit line, allowing customers to draw down funds only when they need the money. 

Ong noted that on average, customers borrow four times more for renovations than they do for other FlexiLoan purposes.

The majority of customers who use the GXS FlexiLoan for renovation have high credit scores and are disciplined in making repayments on time, she added.

Based on renovation loan data compiled by the Credit Bureau Singapore for The Straits Times, the rate of payment delays dropped in the first quarter of 2026 to between 0.99 per cent and 2.55 per cent, from a range of 2.08 per cent to 3.49 per cent in the previous quarter.

This improvement followed a peak in delinquencies around the second and third quarters of 2025, according to the data compiled from 2021 to early 2026.

Default rates also dropped in the first quarter of 2026 to between 0.18 per cent and 0.39 per cent, down from a record high in the final quarter of 2025.

Though the data showed an improvement in the debt situation, rising costs meant that home owners must stay prudent.

Buffer for high costs of renovation post-Covid

Since the Covid-19 pandemic, home owners have had to grapple with permanently higher renovation costs.

The pandemic brought the construction industry to a standstill as workers went back home, and border closures and factory shutdowns led to a shortage of building materials like steel, cement and concrete.

Brennan Phua, assistant manager of SG Interior Design, said renovation and material costs have risen significantly and remained at those levels, showing no signs of dropping back down.

He added that it is very normal for clients, especially first-time home owners, to exceed their budget because they do not know what to expect. 

Tan Yue Wei, founder and principal architect of YWA Studio, advises home owners to cater for a 20 per cent buffer.

Budgets typically overshoot because clients request additional works, but the cost is not made known to them, or they proceed with the works despite knowing the cost and complain later, Tan said.

Rectify problems early during renovation

Melody Tan and Zegna Zheng, first-time home owners of a five-room BTO flat, suggest staying closely involved with one’s interior designer throughout the renovation to iron out problems and brainstorm solutions.

The couple, who are in their early 30s, were in constant communication with Phua, bouncing ideas off him. In turn, he suggested solutions or flagged the extra costs of certain choices.

Tan, an assistant public relations manager, said: “You are the one staying in the house long term, not your interior designer. If there is anything that you need to highlight to them, just highlight before the renovations end.”

By resolving issues early, home owners can avoid costly changes and rectifications post-renovation.

The couple spent about $52,000 on their renovation, above their budget of $40,000 to $45,000.

“Dream and reality must meet each other, so we compromised,” said Zheng, a workplace safety and health officer.

“We just had a kid, so we do not want to have too much financial burden.”

The couple took a renovation loan of $30,000 from DBS and paid cash for the rest of their renovation.

The monthly instalments of $576 over five years are manageable, Zheng said.

They used their credit cards only for the purchase of electrical appliances because they wanted to earn air miles or get credit card cashback.

Finding a suitable interior designer is also important.

Zheng checked out the projects that Phua had completed and found that his expertise and experience matched their requirements. 

“If you need to go and compare interior designers, go ahead. Eventually, you have to trust the designer and the vibes you get from them,” Melody Tan said.

As for Alvin, one lesson he learnt is this: “A home doesn’t need to be perfect to be meaningful, but the financial stress can take away the very comfort you’re trying to build.”