Hidden Costs of Step by Step Guide to Refinancing Your Mortgage You Need to Know
Refinancing your mortgage in Singapore can save thousands, but hidden costs like legal fees ($1,800–$3,000), valuation fees ($350–$900), and lock-in penalties (up to 1.5%) often erode benefits if not planned properly[1][2].
Homejourney prioritizes your financial safety by revealing these costs upfront, helping you calculate true savings before switching banks. This cluster focuses on hidden pitfalls in the refinancing steps, linking to our pillar guide on comprehensive mortgage strategies.
What is Mortgage Refinancing vs Repricing?
Refinancing means switching your mortgage to a new bank for better rates or terms, involving full legal processes. Repricing stays with your current bank but changes packages, costing $800–$1,000 with fewer perks[2].
Choose refinancing when new bank offers beat your current rate by 0.5%+ after costs; repricing suits minor adjustments. For HDB flats, refinancing from HDB loans to banks like DBS or OCBC is popular as rates hit 3-year lows around 1.3–1.4% SORA[5].
Private properties require bank-to-bank switches only—no HDB loans allowed[2]. Use Homejourney's bank rates page to compare DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more instantly.
Step-by-Step Refinancing Process in Singapore
Follow these refinancing steps to minimize hidden costs:
- Assess Eligibility: Check loan-to-value (LTV) limits—90% for first HDB, 75% for others via MAS rules. Use Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator.
- Compare Rates: Track 3M/6M SORA on Homejourney. Submit one application to multiple banks via Singpass for competing offers.
- Apply for Refinance: New bank approves; they handle valuation ($350–$900 for HDB, higher for private)[1].
- Legal Conveyancing: Transfer mortgage—fees $1,800–$3,000, often subsidized[1][2].
- Disbursement: Old loan closes; new funds pay it off. Timeline: 4–8 weeks.
Pro tip: Time before lock-in ends (2–3 years typical) to avoid 1–1.5% penalties[2].
Hidden Costs You Must Know in the Refinance Process
Beyond obvious fees, watch these:
- Legal Fees: $1,800–$3,000 for title checks, paperwork. Banks like UOB or HSBC subsidize fully for loans $300K+ (HDB) or $400K+ (private)[1][2].
- Valuation Fees: $350–$900; subsidies cover 80–100%[1].
- Lock-in Clawback: 1–1.5% of loan if early exit[2].
- Cancellation Fees: 1% on undisbursed loans post-TOP[3].
- Admin/Processing: Minimal, but check for fire insurance mandates.
Net cost often $500 or less with subsidies, per examples[1]. A $1M loan at 2.5% to 1.8% saves $237/month ($28K/10 years), but factor $2,500 upfront[1].
Calculate break-even: (Upfront costs / Monthly savings) months. E.g., $2,500 / $237 = ~10 months[1].
Current Interest Rate Trends Affecting Refinancing
SORA (Singapore Overnight Rate Average) benchmarks most loans, at 1.3–1.4% end-2025, likely steady into 2026[5][6]. Fixed vs floating: Floating ties to SORA +0.2–0.5%; fixed offers stability but higher rates.
The chart below shows recent interest rate trends in Singapore:
As seen, rates dipped, boosting refinancing from HDB to banks—e.g., $400K loan saves $3,600/year with POSB[7]. Track live on Homejourney for perfect timing.
How to Minimize Hidden Costs: Actionable Tips
Negotiate packages with cash rebates ($500+) atop subsidies[1][3]. Leverage Homejourney's multi-bank submission: One form gets offers from DBS, OCBC, UOB, etc., letting banks compete.
Insider tip: Refinance pre-TOP avoids 1% cancellation on 15% undisbursed[3]. For HDB upgraders, check projects directory for values boosting LTV.
- Compare via https://www.homejourney.sg/bank-rates.
- Get quotes; prioritize net subsidies.
- Verify no clawback.
- Apply via Singpass for speed.
Read our related guides: Refinancing vs Repricing: Which is Better for You | Homejourney , How to Calculate If Refinancing is Worth It: Homejourney Guide .
Why Choose Homejourney for Safe Refinancing
Homejourney verifies rates from partners like Maybank, CIMB, RHB, ensuring transparency. Our brokers guide without bias, prioritizing your savings in a trusted environment.
Unlike solo bank visits, we simplify the refinance application and switch mortgage bank process safely.
FAQ: Hidden Costs in Refinancing Mortgage Singapore
Q: What are typical refinancing costs in 2026?
A: Legal $1,800–$3,000, valuation $350–$900—mostly subsidized for larger loans[1][2].
Q: Is refinancing worth it for HDB flats?
A: Yes if savings exceed costs in 12 months; use our calculator[5][7].
Q: How to avoid lock-in penalties?
A: Wait out 2–3 years or negotiate waivers[2][3].
Q: Best banks for refinancing subsidies?
A: DBS, OCBC, UOB offer full legal/valuation coverage; compare on Homejourney[1].
Q: Can I refinance private property easily?
A: Yes, bank-to-bank; no HDB option[2].
Disclaimer: This is general info; consult professionals. Rates fluctuate—verify via Homejourney.
Ready to save? Visit our pillar Step by Step Guide to Refinancing Your Mortgage and start at https://www.homejourney.sg/bank-rates.
