Hidden Costs of Refinancing You Need to Know

The hidden costs of refinancing in Singapore can add up to S$2,000–S$5,000, including legal fees (S$1,800–S$3,000), valuation fees (S$350–S$900), and clawback penalties up to 1.5% of your loan if within lock-in.

At Homejourney, we prioritize transparency to help you make safe, informed decisions on refinancing your HDB or private property loan. This cluster article dives deep into these hidden fees refinance, connecting to our pillar guide on Singapore home loans.

What Are the Main Hidden Costs of Refinancing?

Refinancing involves switching your home loan to another bank for better rates, but upfront costs often catch homeowners off guard. Key expenses include legal fees refinancing, paid to lawyers for document transfer and title deeds, typically S$1,800–S$3,000[1][2]. Valuation fees assess your property's current market value, costing S$350 for HDB flats and up to S$900 for private properties[1][2].

Clawback penalties apply if you refinance within a 2–3 year lock-in period on your existing loan, charging 1–1.5% of the outstanding amount[2][3]. For a S$500,000 loan, that's S$5,000–S$7,500—potentially wiping out years of interest savings.

Administrative fees from your old bank, like processing charges (S$200–S$500), and potential discharge fees also pile on. Homejourney's bank rates comparison at https://www.homejourney.sg/bank-rates factors these in, so you see net savings upfront.

Legal Fees and Valuation Fees: Breakdown for HDB vs Private Properties

For HDB flats, banks subsidize full legal fees refinancing (up to S$2,000–S$3,000) for loans over S$300,000, and partial valuation fee coverage[1][2]. Private properties qualify for subsidies above S$400,000, but expect higher base costs due to complex valuations[1].

Cost Type	HDB Typical	Private Property Typical	Bank Subsidy (Loans >S$300K/S$400K)
Legal Fees	S$1,800–S$2,500	S$2,000–S$3,000	Up to 100%
Valuation Fee	S$350–S$500	S$500–S$900	50–100%

Banks like DBS, OCBC, UOB, HSBC, and Standard Chartered often bundle these subsidies with cash rebates (S$500+), especially in 2026's low-rate environment[1][8]. Use Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator to estimate your out-of-pocket costs.

Clawback Penalty: The Biggest Trap

A clawback penalty kicks in if you break your lock-in early, calculated as 1–1.5% of the undisbursed or outstanding loan[2][5]. Example: On a S$1M loan with 2 years left in lock-in, expect S$10,000–S$15,000[3]. At TOP (Temporary Occupation Permit), a 1% cancellation fee applies on undisbursed funds (often 15% of loan), minimum S$1,000[5].

Insider tip: Check your loan agreement via Singpass on HDB's portal. Refinance 1–2 months before lock-in ends to avoid this. Homejourney verifies these details instantly when you apply via https://www.homejourney.sg/bank-rates.

Current Interest Rate Trends Impacting Refinancing Costs

SORA rates hit 3-year lows in 2025 (1.3–1.4% for 3M SORA), driving HDB refinancing surges into 2026[7][8][9]. Fixed packages from DBS (1.55%) and others make refinancing attractive despite costs[8].

The chart below shows recent interest rate trends in Singapore:

As seen, rates stabilized post-2025 dips, but refinancing now saves S$200–S$300/month on S$500K loans[1]. Track live SORA on Homejourney to time your move perfectly.

How to Calculate If Refinancing Beats the Hidden Costs

Break-even formula: (Total hidden costs) ÷ (Monthly savings) = Months to recover. Example: S$3,000 costs, S$237 savings/month = 12.7 months break-even[1]. For 10 years, net savings hit S$28,440[1].

Input current loan details into Homejourney's calculator.
Add refinancing costs: Legal S$2,500 (post-subsidy S$500), valuation S$200, no clawback.
Compare offers from DBS, OCBC, UOB via multi-bank submission—one app, multiple bids.
Factor 0.7% rate drop (e.g., 2.5% to 1.8%).
Confirm if savings exceed 18 months' costs for worthiness.

Read our full guide: How to Calculate If Refinancing is Worth It | Homejourney . Disclaimer: This is general advice; consult Homejourney mortgage brokers for personalized review.

Actionable Tips to Minimize Hidden Fees

Target banks with full subsidies: HSBC, Standard Chartered often cover 100% for qualifying loans[1].
Apply via Singpass on Homejourney for instant verification, faster approvals.
Negotiate: Bundle with fire insurance or cashback (S$500+).
Avoid TOP refinancing pitfalls—wait post-disbursement[5].
Compare repricing (S$800–S$1,000 fee, same bank) vs refinancing. See Refinancing vs Repricing: Which is Better for You | Homejourney .

Homejourney lets banks compete: Submit once at https://www.homejourney.sg/bank-rates, get best offers from DBS to Maybank.

FAQ: Hidden Costs of Refinancing

Q: What is a clawback penalty in refinancing?
A: A fee (1–1.5% of loan) for early lock-in break. Avoid by waiting out the period[2].

Q: Do banks subsidize legal fees for small loans?
A: Typically no for under S$300K HDB/S$400K private. Check Homejourney for partners like UOB[1][2].

Q: How much are valuation fees in 2026?
A: S$350–S$900, often 80–100% subsidized. Use our tool to confirm[1].

Q: Is refinancing worth it now?
A: Yes, with SORA lows—calculate savings on Homejourney[7][9].

Q: How does Homejourney help with refinancing costs?
A: Compare rates, apply multi-bank, track SORA—all in one safe platform prioritizing your trust.

Ready to uncover real savings? Start with Homejourney's refinancing tools at https://www.homejourney.sg/bank-rates. For full pillar coverage, explore our Singapore Home Loans Guide. Your safe property journey starts here.