10 Ways to Save Money on Your Mortgage in Singapore | Homejourney
This definitive guide reveals 10 actionable ways to save money on your mortgage in Singapore, helping first-time buyers, upgraders, and investors reduce mortgage costs and lower home loan payments. From CPF optimization to smart refinancing, Homejourney equips you with trusted strategies backed by current 2025 data and regulations for maximum mortgage savings tips and interest cost reductions.
At Homejourney, user safety and transparency drive everything we do. We verify bank rates from partners like DBS, OCBC, UOB, and HSBC, so you make confident decisions in a trusted environment.
Table of Contents
- Executive Summary
- 1. Understanding Your Mortgage Basics
- 2. Way 1: Make a Larger Downpayment
- 3. Way 2: Choose the Right Loan Tenure
- 4. Way 3: Shop and Compare Bank Rates
- 5. Way 4: Refinance or Reprice Strategically
- 6. Way 5: Use CPF Funds Wisely
- 7. Way 6: Opt for Shorter Lock-in Periods
- 8. Way 7: Make Prepayments Regularly
- 9. Way 8: Consider Fixed vs Floating Rates
- 10. Way 9: Negotiate with Banks
- 11. Way 10: Monitor SORA and Market Trends
- Common Mistakes to Avoid
- Your Mortgage Savings Action Plan
- FAQ: Saving Money on Mortgages in Singapore
- Next Steps with Homejourney
Executive Summary: Why Saving on Your Mortgage Matters Now
In 2025, Singapore's mortgage rates hover between 2.40% and 3% for fixed packages, down from 2024 highs, but still elevated by historical standards[3][1]. A typical $800,000 HDB loan at 2.8% p.a. over 25 years costs over $1.2 million in total repayments, with interest alone exceeding $400,000. Small changes—like shaving 0.2% off your rate—can save $50,000+ over the loan life[3].
Homejourney's platform lets you compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more, calculate eligibility, and apply via Singpass for the best deals. This guide delivers 10 ways to save money on your mortgage, with real calculations, HDB/URA rules, and insider tips for maximum impact.
1. Understanding Your Mortgage Basics in Singapore
Before diving into savings, grasp key terms: SORA (Singapore Overnight Rate Average) is the benchmark for most floating loans, currently at 3M SORA ~2.8% + bank margin (0.5-0.75%)[3][2]. Fixed rates offer stability at 2.40-2.70% for 2-3 years[3]. HDB loans cap at 2.6% + CPF OA rate (historically lower), but private banks often beat this post-lock-in[1].
Total Borrowing Limit (TBL) is 75% LTV for HDB up to $1.5M, 55% above; MSR/ TDSR caps payments at 30%/55% of income[3]. Use Homejourney's mortgage calculator to model scenarios instantly.
Current Rate Snapshot (2025)
| Loan Type | Rate (p.a.) | Best For |
|---|---|---|
| HDB Loan | 2.6% + CPF OA | Stability |
| Fixed (2-yr) | 2.40-2.70% | Short-term certainty |
| 3M SORA + 0.75% | ~3.55% | Rate fall expectation |
Source: DBS, market averages 2025[3]. Rates fluctuate; check Homejourney bank rates for live updates.
2. Way 1: Make a Larger Downpayment to Cut Interest Costs
Aim for 20-30% downpayment instead of minimum 5-25%. For a $1M condo, 25% ($250K) vs 10% ($100K) loan reduces principal by $150K, saving ~$100K in interest over 25 years at 2.8%[3].
Real Example: HDB BTO in Punggol ($500K), 20% down ($100K) vs 5% ($25K): Monthly payment drops from $2,100 to $1,680, saving $420/month[3]. Use CPF Ordinary Account (OA) up to limits—check via Homejourney calculator.
3. Way 2: Choose the Optimal Loan Tenure
Shorter tenure = less interest, but higher monthly payments. 20-year vs 30-year on $600K loan at 2.8%: Total interest $250K vs $400K, saving $150K—but monthly jumps $500[1].
Rule: Max tenure = age + 65 (HDB), but target 25 years max. Balance with TDSR; test on Homejourney tools.
4. Way 3: Shop and Compare Rates Across Banks
Don't accept first offer. In 2025, DBS fixed at 2.45%, OCBC 2.50%, UOB 2.40%—0.1% difference saves $20K on $800K loan[3]. Homejourney aggregates rates from 10+ banks; apply once via Singpass for competing offers.
Pro Tip: Time shopping 4 months pre-lock-in expiry[3]. Visit https://www.homejourney.sg/bank-rates now.
5. Way 4: Refinance or Reprice at the Right Time
Refinance switches banks (fees ~1% loan amount); reprice stays (often free once)[3][2]. If current rate >3%, refinance now—savings kick in post-2yr lock-in[2]. Break-even: Fees recouped in 2-3 years if rate drops 0.5%[3].
Example: $700K loan from 3.2% to 2.6%: $300/month saved, $90K total[1]. Use Homejourney for seamless multi-bank apps.
6. Way 5: Maximize CPF for Mortgage Payments
CPF OA earns 2.5% + accrued interest, often beating bank rates—use it fully[3]. For $2K monthly, allocate CPF first to cut cash outflow. Read more in our guide: 5 Strategies to Optimize Your Mortgage with CPF | Homejourney .
Caveat: Tops up required on sale. Compare CPF vs cash: CPF vs Cash for Mortgage: Smarter Strategy in 2025 | Homejourney .
7. Way 6: Select Shorter Lock-in Periods
2-year lock-in vs 5-year: Flexibility to refinance sooner if rates fall[4]. Penalty ~1.5% if break early, but post-2025 cuts favor short locks[2]. Banks like HSBC offer 1-year options.
8. Way 7: Make Regular Prepayments
Pay extra principal annually (up to 20% loan without fee for banks). $10K prepay on $500K loan saves $20K interest, shortens tenure[1]. HDB allows unlimited CPF prepays.
Strategy: Bi-annual lumps from bonuses. Track via Homejourney calculator.
9. Way 8: Balance Fixed vs Floating Rates
Fixed for stability (2.4-2.7%), floating (SORA) for potential drops[3]. Hybrid: 50/50 split via DBS[3]. SORA expected stable/mild decline 2025[2].
The chart below shows recent interest rate trends in Singapore:
As seen, 3M SORA dipped to 2.8%—ideal for floating if optimistic[2][3].
10. Way 9: Negotiate Better Terms
Leverage good credit/payment history for 0.1-0.2% off margins[1]. Multi-bank apps via Homejourney prompt competition. Ask for cashback (up to 0.2% rebate).
Insider Tip: Reference rival quotes politely.
11. Way 10: Track SORA and Time Your Moves
Monitor via Homejourney for repricing. Refi if spread >0.5% savings post-fees[2]. 2025 outlook: Marginal Fed cuts keep SORA ~2.8-3.2%[2].
Common Mistakes to Avoid When Trying to Reduce Mortgage Costs
- Refinancing during lock-in: Penalties eat savings[4].
- Ignoring fees: Legal/valuation ~$2-5K[3].
- Overlooking TDSR: Can't borrow more later[1].
- Not using CPF optimally: Miss 2.5% 'guaranteed' rate[3].
- Long tenures: Double interest costs[1].
Disclaimer: This is general advice; consult professionals. Homejourney verifies data for trust.
Your Prioritized Mortgage Savings Action Plan
- Week 1: Calculate eligibility at Homejourney calculator.
- Month 1: Compare rates across DBS/OCBC/UOB at bank-rates.
- 3 Months Pre-Lock-in: Reprice/refinance.
- Quarterly: Prepay 5-10% principal.
- Ongoing: Track SORA, max CPF use.
Expected: 10-20% cost reduction for proactive users[1][3].
FAQ: Saving Money on Mortgages in Singapore
How much can I save by refinancing my mortgage in 2025?
Switching from 3.2% to 2.6% on $800K saves $40K+ over 25 years[2][3]. Use Homejourney tools for personalized calc.
What's the best way to use CPF to lower home loan payments?
Auto-deduct from OA first; prepay OA for 4% interest boost. Details: Using CPF to Reduce Your Mortgage Burden in Singapore | Homejourney Guide .
Should I choose fixed or SORA loan to cut interest costs?
Fixed for now (2.4%), SORA if rates fall further[3]. Compare hybrids.
When is the best time to refinance in Singapore?
4 months pre-lock-in, when savings > fees[3][4].
Can I prepay my HDB loan without penalty?
Yes, unlimited with CPF; banks cap 20% p.a.[1].
How does SORA affect my mortgage savings?
Lower SORA = lower payments on floating loans. Track live on Homejourney.
Next Steps: Start Saving with Homejourney Today
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