Refinance & Save Calculator
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Comprehensive Guide to Home Loan Refinancing in Singapore (2024 Edition)
Refinancing your home loan is one of the most effective financial tools available to Singaporean homeowners. In a fluctuating interest rate environment, staying with your original mortgage package could mean overpaying thousands of dollars in interest every year. Whether you own an HDB flat or a private condominium, understanding how to strategically refinance can unlock significant savings and improve your cash flow.
At Singapore Home Services, we specialize in helping homeowners navigate the complex landscape of Fixed Rate, SORA-pegged Floating Rate, and Board Rate packages to find the perfect fit for your financial goals.
Why Should You Refinance?
💰 Lower Interest Rates
The primary reason to refinance. If your current lock-in period is over, your rate has likely jumped to a higher spread. Switching to a new bank can reset this to a lower introductory rate.
💵 Cash Out Equity
For private property owners, if your property value has appreciated, you can take a Term Loan to cash out the equity for investment or renovation needs.
📅 Adjust Loan Tenure
Refinancing allows you to shorten your tenure (to pay off debt faster) or lengthen it (to reduce monthly cash installments and improve cash flow).
Refinancing vs. Repricing: What is the Difference?
Many homeowners confuse these two terms. While both aim to lower your interest costs, the process and costs differ significantly.
| Feature | Refinancing | Repricing |
|---|---|---|
| Definition | Moving your loan to a Different Bank (e.g. DBS to UOB). | Staying with the Same Bank but switching packages. |
| Interest Rates | Usually Lower (New customer rates). | Usually slightly higher (Existing customer rates). |
| Legal Costs | Yes ($2,000 - $3,000), often subsidized by the new bank. | Minimal or None (Admin fees only). |
| Lock-in Period | New lock-in (usually 2-3 years). | New lock-in (usually 1-2 years). |
| Flexibility | High. You can choose from all banks in Singapore. | Low. You are limited to what your current bank offers. |
When is the Best Time to Refinance?
Timing is everything. You should start reviewing your mortgage options roughly 4 to 6 months before your current lock-in period expires. Most banks require a 3-month notice period to redeem your loan. If you wait until your lock-in expires to apply, you may be stuck paying higher "thereafter" rates during the notice period.
Understanding the Costs Involved
While refinancing saves money, it isn't free. To ensure it is a profitable move, the interest savings must outweigh the transaction costs:
- Legal Fees: Typically $2,000 to $3,000 for private properties. Many banks offer legal subsidies (cash rebates) for loans above $500k to offset this.
- Valuation Fees: Banks require a new valuation report, costing between $200 to $500.
- Early Redemption Penalty: If you exit your current loan before the lock-in ends, you may face a penalty of 1.5% on the outstanding loan amount. Always check your contract dates.
- Clawback Period: If you received a subsidy (like legal fee coverage) from your current bank, you usually must stay with them for 3 years. Leaving early triggers a clawback of that subsidy.
HDB Refinancing vs. Private Property Refinancing
The rules differ depending on your property type. For HDB owners, you must adhere to the Mortgage Servicing Ratio (MSR) of 30%, meaning your monthly repayment cannot exceed 30% of your gross monthly income. You currently cannot take a "Cash Out" term loan on HDB flats.
For Private Property owners, the Total Debt Servicing Ratio (TDSR) of 55% applies. This gives you more flexibility. Furthermore, private owners have the unique advantage of Equity Term Loans, allowing you to borrow cash against the appreciated value of your home at low mortgage interest rates.
Frequently Asked Questions
It is difficult. When you refinance, the new bank treats it as a fresh application. They will check your credit score (CBS) and TDSR. If your financial situation has deteriorated, sticking with your current bank (Repricing) might be the safer option as they may not require a full credit re-assessment.
Yes, slightly. When you refinance, you will need to engage a lawyer to reactivate the CPF withdrawal usage for the new bank. This is a standard administrative process handled by the law firm.
SORA (Singapore Overnight Rate Average) is the benchmark interest rate used by most banks for floating packages. It replaces the old SIBOR/SOR. It is transparent and based on actual market transactions. Choosing a 3M-SORA package means your interest rate will update every 3 months based on market conditions.
On a $1 Million loan, a 0.5% reduction in interest rate saves you approximately $5,000 per year, or $15,000 over a 3-year lock-in period. Use our calculator above to see your exact savings.
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Get A Free Refinance AssessmentRefinancing Common Questions
Expert answers to help you navigate Singapore's mortgage landscape.
When is the best time to start applying for refinancing?
You should start reviewing your options 4 months before your current lock-in period ends. Most banks require a 3-month notice period to redeem your loan without penalty. Starting early allows you to lock in a favorable rate and seamlessly switch banks on the exact day your penalty period expires.
How much can I actually save by refinancing?
Savings can be substantial. For a $1,000,000 loan, a rate reduction of just 0.5% (e.g., dropping from 3.5% to 3.0%) saves you approximately $5,000 per year in interest. Over a typical 3-year lock-in period, this totals $15,000 in savings, which far outweighs the typical legal costs of refinancing.
What are the upfront costs involved in refinancing?
The two main costs are Legal Fees (typically $2,000 to $3,000) and Valuation Fees ($300 to $500). However, for loan amounts above $500,000, many banks in Singapore offer cash rebates or legal subsidies to fully or partially offset these costs, making the switch effectively free.
What is the difference between Repricing and Refinancing?
Repricing means switching to a new package with your current bank. It is faster (approx. 1 month) but rates are often slightly higher. Refinancing means moving your loan to a new bank. It takes longer (3 months) and requires legal work, but usually offers the lowest "new customer" interest rates and cash rebates.
Is there a penalty for refinancing early?
Yes. If you exit your loan during the Lock-In Period, banks typically charge a penalty of 1.5% of your outstanding loan amount. On a $500k loan, that is a $7,500 fine. Always check your "Lock-In Expiry Date" before signing any new offer.
Should I switch from an HDB Loan to a Bank Loan?
The HDB Concessionary Loan is stable at 2.6% p.a.. If bank fixed rates drop significantly below 2.5%, switching can save money. However, note that once you switch to a bank loan, you cannot switch back to an HDB loan later. Bank loans also require a strictly cash downpayment (5%) for new purchases, whereas HDB loans can maximize CPF usage.
What is a "Clawback Period" for subsidies?
If a bank gives you a legal subsidy or cash rebate, they usually impose a 3-Year Clawback Period. Even if your Lock-In is only 2 years, leaving before 3 years may require you to refund the full subsidy (e.g., $2,000). Always align your refinancing strategy with this timeline.
What is the 3M SORA rate?
SORA (Singapore Overnight Rate Average) is the benchmark used for most floating rate packages, replacing SIBOR. The 3M Compounded SORA is an average of the rate over the past 3 months. It is generally more stable than daily rates. Your loan rate is typically calculated as: 3M SORA + Bank Spread (e.g., 0.70%).
Can I cash out extra money from my property?
This is called an Equity Term Loan. It is only available for Private Properties (not HDBs). If your property value has increased, you can borrow cash up to 75% of the property value (minus outstanding CPF/Loan usage). This cash can be used for investment or business but usually cannot be used to buy another property.
Will refinancing affect my Credit Score?
Refinancing involves a new credit inquiry, which may cause a small, temporary dip in your credit score. However, this is standard procedure. As long as you service the new loan on time, your score typically recovers within a few months.