Asked by Anonymous
taking a reno loan now affect my future home loan eligibility?
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3 Answers
**Yes, taking a renovation loan now can significantly cut into your future home loan eligibility if you still owe money on it when you apply for your mortgage.**
The Monetary Authority of Singapore (MAS) enforces strict debt limits, and a renovation loan is counted as active monthly debt.
---
### How It Impacts Your Borrowing Limits
1. **TDSR (Total Debt Servicing Ratio) & MSR (Mortgage Servicing Ratio):**
* Under MAS rules, **all monthly debt obligations** (car loans, credit cards, study loans, and renovation loans) cannot exceed **55% of your gross income (TDSR)**.
* If purchasing an HDB flat, your monthly housing mortgage alone cannot exceed **30% of your gross income (MSR)**.
2. **The Impact of Short Tenures:**
* Renovation loans have short tenures—typically **1 to 5 years**.
* A S$30,000 renovation loan over 3 years carries a heavy monthly instalment of roughly S$900 to S$950/month.
* When the bank runs your TDSR calculation, that S$950 monthly commitment directly reduces your borrowing buffer dollar-for-dollar.
* *Example:* For a variable/commission earner whose recognized income is already subject to a 30% haircut, an extra S$950 debt can shave S$100,000 to S$150,000 off your maximum home loan eligibility.
---
### The Crucial Sequence: How to Avoid the Trap
* **Scenario A (Buying Flat First, Renovating After):**
* **This is the standard, safe route.** You apply for and secure your Housing Loan / In-Principle Approval (IPA) **first**.
* Once your flat purchase completes and the mortgage is disbursed, you take the renovation loan. The reno loan will not affect your completed housing purchase.
* **Scenario B (Taking a Reno Loan Now Before Buying Next Year):**
* If you take a renovation loan today (e.g., for an existing property or parents' flat) and try to buy your HDB flat next year, the remaining loan balance **will directly depress your home loan quantum**.
* **The Fix:** If you must take a reno loan before applying for a new mortgage, you will need to **fully pay off and cancel the renovation loan** and obtain a discharge letter from the bank before submitting your mortgage application.
---
Gan Eng Joo Onassis 颜荣裕, REALTOR®
MSc BIT (Middlesex, UK); BBA (UniSA)
CEA Reg No: R021244C | Mobile: (+65) 88899918
Email: onassis@sgagent.com
SGAgent.com | SGRealtor.com | SGCommercial.com | SGCBD.com
SGShowflat.com | SGNewLaunch.com
Integrated Services: SGCash.com | SGRepair.com | SGLegal.com
Social (Facebook & TikTok): @sgcommercial Read More
The Monetary Authority of Singapore (MAS) enforces strict debt limits, and a renovation loan is counted as active monthly debt.
---
### How It Impacts Your Borrowing Limits
1. **TDSR (Total Debt Servicing Ratio) & MSR (Mortgage Servicing Ratio):**
* Under MAS rules, **all monthly debt obligations** (car loans, credit cards, study loans, and renovation loans) cannot exceed **55% of your gross income (TDSR)**.
* If purchasing an HDB flat, your monthly housing mortgage alone cannot exceed **30% of your gross income (MSR)**.
2. **The Impact of Short Tenures:**
* Renovation loans have short tenures—typically **1 to 5 years**.
* A S$30,000 renovation loan over 3 years carries a heavy monthly instalment of roughly S$900 to S$950/month.
* When the bank runs your TDSR calculation, that S$950 monthly commitment directly reduces your borrowing buffer dollar-for-dollar.
* *Example:* For a variable/commission earner whose recognized income is already subject to a 30% haircut, an extra S$950 debt can shave S$100,000 to S$150,000 off your maximum home loan eligibility.
---
### The Crucial Sequence: How to Avoid the Trap
* **Scenario A (Buying Flat First, Renovating After):**
* **This is the standard, safe route.** You apply for and secure your Housing Loan / In-Principle Approval (IPA) **first**.
* Once your flat purchase completes and the mortgage is disbursed, you take the renovation loan. The reno loan will not affect your completed housing purchase.
* **Scenario B (Taking a Reno Loan Now Before Buying Next Year):**
* If you take a renovation loan today (e.g., for an existing property or parents' flat) and try to buy your HDB flat next year, the remaining loan balance **will directly depress your home loan quantum**.
* **The Fix:** If you must take a reno loan before applying for a new mortgage, you will need to **fully pay off and cancel the renovation loan** and obtain a discharge letter from the bank before submitting your mortgage application.
---
Gan Eng Joo Onassis 颜荣裕, REALTOR®
MSc BIT (Middlesex, UK); BBA (UniSA)
CEA Reg No: R021244C | Mobile: (+65) 88899918
Email: onassis@sgagent.com
SGAgent.com | SGRealtor.com | SGCommercial.com | SGCBD.com
SGShowflat.com | SGNewLaunch.com
Integrated Services: SGCash.com | SGRepair.com | SGLegal.com
Social (Facebook & TikTok): @sgcommercial Read More
Due to total debt servicing ratio imposed on all home loans in Singapore, having a renovation loan that has not been fully settled will indeed affect your home loan. It is not about your eligibility but rather your amount of loan instead.
——
I have been in the real estate business since 2009, with more than 15 years of experience serving the Singapore real estate market. Check out the EdgeProp featured article on myself recently at https://www.edgeprop.sg/property-news/geryl-lim-leading-landed-real-estate-heart-hustle-and-harmony
I am very active in the residential segment of Singapore real estate market, having transacted hundreds of deals from HDBs to private condominiums and landed properties in Singapore, and have handled many unique cases in sales and purchases as well as rental deals.
Over the years, I have also established a network reaching out to more than 15,900 expatriates, bringing my market presence to both in and outside of Singapore. This has created an additional exposure when I manage my client's portfolios, on top of the conventional on and offline platforms, where other estate agents are relying on. This has allowed me to consistently convert leads into results.
With an evolving market, where change is the only constant, I have also been investing in upgrading of my knowledge and skills sets to improve myself and meet the demands of current and future market.
We are offering our clients a complimentary first consultation without obligations (Absolutely FREE!). Schedule for your FREE session today!
Warmest regards,
Geryl Lim
Deputy Branch Associate Director
Email: geryl.lim@orangetee.com / geryl7772@gmail.com
OrangeTee & Tie Pte Ltd 430 Lorong 6 Toa Payoh #01-01 OrangeTee Building Singapore 319402
Estate Agent Licence No. L3009250K
+65 92787772
www.geryllim.com
My self introductory video on https://www.youtube.com/watch?v=S_2NydENfx0
-----
Note: We value your home as much as you do! Find out the indicative value of your home at http://bit.ly/UrHomeMatters and get monthly update on your home value. Restructure your portfolio with us, speak to us!
Tenants can visit http://bit.ly/SGExpatRental (Official Rental Requirements - Singapore Expatriates) to indicate your rental requirements.
Visit and Like my facebook page at https://www.facebook.com/GerylLimSince2009/ - Aspiring To Be The Best Real Estate Agent In Singapore
Pick up knowledge, skills and Real Estate concepts at https://www.facebook.com/RealEstateXcellence/
New Singapore Expatriates on facebook is up and running. Come join us at https://www.facebook.com/groups/newsgexpats/
-----
Landed Dynamic Alliance
Home of *7772 Hotline
Check out our latest Landed Dynamic Alliance 7772 mobile application on iOS or Android @ http://l.ead.me/7772 Read More
——
I have been in the real estate business since 2009, with more than 15 years of experience serving the Singapore real estate market. Check out the EdgeProp featured article on myself recently at https://www.edgeprop.sg/property-news/geryl-lim-leading-landed-real-estate-heart-hustle-and-harmony
I am very active in the residential segment of Singapore real estate market, having transacted hundreds of deals from HDBs to private condominiums and landed properties in Singapore, and have handled many unique cases in sales and purchases as well as rental deals.
Over the years, I have also established a network reaching out to more than 15,900 expatriates, bringing my market presence to both in and outside of Singapore. This has created an additional exposure when I manage my client's portfolios, on top of the conventional on and offline platforms, where other estate agents are relying on. This has allowed me to consistently convert leads into results.
With an evolving market, where change is the only constant, I have also been investing in upgrading of my knowledge and skills sets to improve myself and meet the demands of current and future market.
We are offering our clients a complimentary first consultation without obligations (Absolutely FREE!). Schedule for your FREE session today!
Warmest regards,
Geryl Lim
Deputy Branch Associate Director
Email: geryl.lim@orangetee.com / geryl7772@gmail.com
OrangeTee & Tie Pte Ltd 430 Lorong 6 Toa Payoh #01-01 OrangeTee Building Singapore 319402
Estate Agent Licence No. L3009250K
+65 92787772
www.geryllim.com
My self introductory video on https://www.youtube.com/watch?v=S_2NydENfx0
-----
Note: We value your home as much as you do! Find out the indicative value of your home at http://bit.ly/UrHomeMatters and get monthly update on your home value. Restructure your portfolio with us, speak to us!
Tenants can visit http://bit.ly/SGExpatRental (Official Rental Requirements - Singapore Expatriates) to indicate your rental requirements.
Visit and Like my facebook page at https://www.facebook.com/GerylLimSince2009/ - Aspiring To Be The Best Real Estate Agent In Singapore
Pick up knowledge, skills and Real Estate concepts at https://www.facebook.com/RealEstateXcellence/
New Singapore Expatriates on facebook is up and running. Come join us at https://www.facebook.com/groups/newsgexpats/
-----
Landed Dynamic Alliance
Home of *7772 Hotline
Check out our latest Landed Dynamic Alliance 7772 mobile application on iOS or Android @ http://l.ead.me/7772 Read More
1
This depends on what entity is financing your reno loan, and whether that loan is paid out by the time you apply for the next loan.
Specifically, it affects your total debt servicing ratio (TDSR), which is a limit that MAS imposes on financial institutions when computing how much loan you can take for housing after considering your income, age and other outstanding loans such as car loans, student loans, reno loans.
Happy to have a deeper conversation on this if you are planning out your finances for property! Drop me a message via whatsapp below and we can chat further.
Kay Cloud
The Harvard Educated Agent
Propnex Realty Pte Ltd
cloud@propnex.com
Tel: (+6.5.) 8.5.6.7.4.5.8.5
Whatsapp -> https://wa.me/6585674585 Read More
Specifically, it affects your total debt servicing ratio (TDSR), which is a limit that MAS imposes on financial institutions when computing how much loan you can take for housing after considering your income, age and other outstanding loans such as car loans, student loans, reno loans.
Happy to have a deeper conversation on this if you are planning out your finances for property! Drop me a message via whatsapp below and we can chat further.
Kay Cloud
The Harvard Educated Agent
Propnex Realty Pte Ltd
cloud@propnex.com
Tel: (+6.5.) 8.5.6.7.4.5.8.5
Whatsapp -> https://wa.me/6585674585 Read More