How to Calculate If Refinancing is Worth It | Homejourney

How to Calculate If Refinancing is Worth It: A Singapore Homeowner's Guide

Refinancing your home loan can save you thousands of dollars, but only if the numbers work in your favour. The key to making a smart refinancing decision is understanding whether your potential interest savings outweigh the costs involved in switching banks. At Homejourney, we believe transparent financial guidance is essential for building trust with homeowners, which is why we've created this comprehensive guide to help you calculate your refinancing break-even point with confidence.

Whether you're a property owner looking to reduce your monthly payments or an investor seeking to optimise your portfolio returns, this guide will walk you through the exact calculations you need to make an informed decision.

Understanding the Refinancing Calculation Basics

Before diving into the numbers, it's important to understand what you're calculating. Refinancing means switching your home loan from your current bank to a new bank that offers better terms. The process involves costs (legal fees, valuation fees, and potential early redemption penalties), but it can also deliver significant savings through lower interest rates.

The fundamental question is simple: Will my interest savings exceed my refinancing costs, and if so, how long will it take? This timeframe is called your break-even point—the moment when your cumulative savings surpass your upfront costs.

In Singapore, most home loans come with a 2-year lock-in period, after which you can refinance without penalty. Understanding this timeline is crucial because it affects whether refinancing makes financial sense for you.

The Five-Step Refinancing Calculation Process

Step 1: Identify Your Current Loan Details

Start by gathering your current mortgage information from your bank statement or loan agreement:

• Outstanding loan balance (remaining amount you owe)
• Current interest rate (fixed or floating)
• Remaining loan tenure (years left to repay)
• Current monthly payment amount
• Lock-in period status (are you still within it?)

This information is critical because your break-even calculation depends on accurately knowing your current financial position. If you're unsure about any details, contact your bank directly—most banks provide this information within 24 hours.

Step 2: Research New Refinancing Rates

The interest rate difference between your current loan and a new refinancing offer is what drives your potential savings. In January 2026, Singapore banks are offering competitive refinancing rates ranging from 1.35% to 1.78% for fixed-rate packages, depending on the bank and loan amount.[3]

To make an accurate comparison, you need to:

• Compare rates across multiple banks (DBS, OCBC, UOB, HSBC, Standard Chartered, and others)
• Ensure you're comparing the same loan tenure and type (fixed vs floating)
• Note the lock-in period for each new offer
• Identify any cash rebates or subsidies the new bank offers

At Homejourney, you can compare refinancing rates from all major banks in one place without visiting multiple branches. Our bank rates comparison tool shows you current offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB Bank, and more, helping you identify the best rates for your situation.Bank Rates

The chart above shows recent SORA trends, which directly impact floating-rate mortgages. If you're considering a floating-rate refinance, tracking these trends helps you time your decision strategically.

Step 3: Calculate Your Refinancing Costs

This is where many homeowners make mistakes. Refinancing isn't free—you need to account for all costs involved in switching banks. Here are the typical costs in Singapore:

• Legal fees: Typically S$400–S$800 (covers documentation and contract review)
• Valuation fees: Usually S$300–S$600 (bank requires updated property valuation)
• Early redemption penalty: 1.5% of outstanding loan balance if you're still within the lock-in period
• Stamp duty: Usually waived for refinancing, but confirm with your new bank

Good news: Most Singapore banks now offer cash rebates that cover or partially offset these costs.[3] For loans above S$500,000, banks typically offer S$2,000–S$2,800 in cash rebates. This means your net cost might be zero or even result in a cash benefit.

Let's use a real example: If your outstanding loan is S$500,000 and you're refinancing with a bank offering a S$2,000 rebate, your net costs might be:

• Legal fees: S$600
• Valuation fees: S$400
• Bank rebate: -S$2,000
• Net cost: S$0 (you actually benefit by S$1,000)

For a detailed breakdown of all hidden costs, see our guide on hidden costs of refinancingHidden Costs of Refinancing: Compare Rates Safely | Homejourney .

Step 4: Calculate Your Monthly Savings

Now for the core calculation. Your monthly savings depend on three factors:

• Your outstanding loan balance
• The interest rate reduction (current rate minus new rate)
• Your remaining loan tenure

The standard mortgage repayment formula is:[2]

M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1 ]

Where M is monthly payment, P is principal, r is monthly interest rate, and n is number of payments.

Rather than doing this manually, use a refinancing calculator. At Homejourney, our refinancing calculator instantly shows your potential monthly savings when you input your current loan details and new rate. This takes the guesswork out of the calculation.Bank Rates

Real example: If you have a S$500,000 loan at 2.5% with 20 years remaining, your monthly payment is approximately S$2,645. If you refinance at 1.65%, your new monthly payment drops to approximately S$2,340—a monthly saving of S$305.

Step 5: Calculate Your Break-Even Point

This is the critical moment: How many months until your cumulative monthly savings exceed your refinancing costs?

Break-even months = Total refinancing costs ÷ Monthly savings

Using our example above:

• Total refinancing costs: S$0 (net benefit after rebate)
• Monthly savings: S$305
• Break-even point: Immediate (you're already ahead)

In this scenario, refinancing is clearly worth it. But let's consider a more conservative example:

• Total refinancing costs: S$1,500 (after rebate)
• Monthly savings: S$200
• Break-even point: 7.5 months

This means you'll recover your refinancing costs in less than 8 months, and every month after that is pure savings. Over the remaining 19+ years of your loan, you'd save approximately S$46,800.

Critical Timing Considerations for Singapore Homeowners

The Lock-In Period Factor

Most Singapore home loans have a 2-year lock-in period. If you refinance before this period ends, you'll face an early redemption penalty of approximately 1.5% of your outstanding loan balance.[3] This significantly impacts your break-even calculation.

For example, if you're only 6 months into a 2-year lock-in period and your outstanding balance is S$500,000, the penalty would be S$7,500. This must be added to your refinancing costs, which might push your break-even point beyond what makes financial sense.

Our recommendation: If you're still within the lock-in period, check whether your current bank offers a repricing option (adjusting your rate with the same bank without penalty). See our guide on refinancing vs repricingRefinancing vs Repricing: Which is Better for You? Homejourney for more details.

Interest Rate Environment

Your refinancing decision should also consider the broader interest rate environment. If rates are trending upward, refinancing into a fixed rate now might protect you from future increases. If rates are trending downward, you might want to wait a few months for even better offers.

At Homejourney, you can track real-time SORA rates to understand the direction of the market and time your refinancing decision strategically. This is particularly important for floating-rate mortgages, which are tied directly to SORA movements.

Practical Refinancing Decision Framework

Use this simple framework to decide if refinancing is worth it for your situation:

Remember: If you're planning to sell your property within your break-even timeframe, refinancing won't be financially beneficial. However, if you're planning to hold the property long-term, even a 24-month break-even point can result in substantial savings over the remaining loan tenure.

How Homejourney Simplifies Your Refinancing Calculation

At Homejourney, we've designed our platform to make refinancing calculations transparent and straightforward. Here's how we help:

• Compare rates instantly: See current refinancing offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB Bank, and more in one comparison table
• Calculate break-even automatically: Our refinancing calculator shows you exact monthly savings and break-even months based on your specific situation
• Submit one application to all banks: No more visiting branches individually. Apply once through Homejourney and let banks compete for your business
• Use Singpass for instant verification: Auto-fill your application in seconds with MyInfo integration for faster processing
• Track live SORA rates: Monitor 3M and 6M SORA movements to time your refinancing decision perfectly

Our commitment to user safety and trust means we verify all information, provide transparent fee breakdowns, and ensure you understand exactly what you're getting before you commit to refinancing.

Ready to calculate your refinancing savings? Visit our bank rates pageBank Rates to compare rates, calculate your break-even point, and submit your refinancing application.

References

1. Singapore Property Market Analysis 3 (2026)
2. Singapore Property Market Analysis 2 (2026)