How to Calculate If Refinancing is Worth It | Homejourney
Refinancing is worth it if your monthly savings exceed total costs within 2-3 years, typically saving S$10,000+ over the loan term for a S$1M loan dropping from 3.5% to 3.0%. This cluster article dives into the exact calculations Singapore homeowners need, building on our pillar guide to Singapore home loans. At Homejourney, we prioritize your safety with verified rates and multi-bank comparisons to ensure transparent decisions.
Refinancing Fundamentals in Singapore
Refinancing means switching your home loan to a new lender for better rates or terms, unlike repricing which stays with your current bank. For HDB or private properties, this is key when to refinance mortgage after your lock-in period ends, avoiding penalties of 1.5% on prepaid amounts[1][2]. Homejourney helps you compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more at https://www.homejourney.sg/bank-rates.
In Singapore, most loans tie to SORA (Singapore Overnight Rate Average), the MAS benchmark replacing SOR since 2024. Current 3M compounded SORA hovers around 3.0-3.2% plus bank margins of 0.7-1.0% p.a.[1]. An interest rate trigger of 0.5% drop often justifies refinancing, but calculate first using our eligibility tool at https://www.homejourney.sg/bank-rates#calculator.
Step-by-Step: How to Calculate If Refinancing is Worth It
Follow these actionable steps for precise analysis:
- Input Current Loan Details: Note outstanding principal (e.g., S$800,000), rate (e.g., 3.5%), tenure left (25 years), monthly payment (S$4,000).
- Find New Rates: Check Homejourney for best offers, e.g., UOB's 3M SORA +0.70% Year 1 (est. 3.7% total, dropping to 3.2% later)[1]. New payment: S$3,700 (use DBS calculator style[8]).
- Calculate Monthly Savings: S$300/month (S$4,000 - S$3,700).
- Tally Costs: Legal fees S$2,000-3,000 (often subsidized), valuation S$500-1,500, admin S$200, possible clawback if early[2]. Total: S$4,000.
- Break-Even Point: Costs / Savings = S$4,000 / S$300 = 13 months. If under 24-36 months, it's worth it.
Disclaimer: This is general guidance; consult professionals for personalized advice. Homejourney verifies all data for trustworthiness.
Real Singapore Example: HDB Flat in Tampines
For a S$500,000 HDB loan at 2.6% (HDB rate) vs bank refinance to SORA+0.8% (3.4%), savings might be minimal due to low HDB rates. But for private condo in Orchard (S$1.2M loan, 3.8% to 3.2%), monthly save S$450, costs S$5,000, break-even 11 months—worth it. Track via our SORA tool on Homejourney.
Hidden Costs and Break-Even Analysis
Best time refinance aligns with lock-in period end (2-3 years standard)[2]. Factor clawback (prepaid interest refund loss, up to 0.5 months interest), discharge fees S$1,500. Banks like Citibank offer calculators showing net savings[3].
Total costs average S$3,000-6,000 for loans over S$450k, with cashback S$2,000 from UOB[1]. Net cost: S$2,000-4,000. Over 20 years, 0.5% rate cut saves S$50,000+ interest.
The chart below shows recent interest rate trends in Singapore:
As seen, SORA dipped 0.3% in late 2025—prime refinance timing if your rate exceeds market by 0.5%[1]. See our full guide: Hidden Costs & Best Time to Refinance Home Loan | Homejourney .
When to Refinance Mortgage: Key Triggers
- Lock-in Ends: No penalties; start 3 months early for seamless switch[2].
- Rate Drop: SORA falls 0.5%+; compare on Homejourney vs repricing (faster, 5 weeks, lower fees)[2].
- Life Changes: Income up (TDSR under 55%), equity grown (LTV <75%).
- Promos: UOB S$2,500 cash for S$1M+ loans[1].
Repricing suits minor tweaks; refinancing for big savings or features like free conversions[1]. Learn more: Refinancing vs Repricing: Which is Better for You? Homejourney .
Actionable Refinancing Process on Homejourney
Submit one application via Singpass to all banks—DBS, OCBC, UOB, HSBC—get competing offers. Timeline: 8-13 weeks[2]. Docs: NRIC, income slips, property title, latest statements.
- Calculate on Homejourney calculator.
- Apply multi-bank at bank-rates.
- Choose best offer; track SORA live.
- Legal completion; enjoy savings.
For HDB, check CPF usage via official calculator[7]. Pair with property search at https://www.homejourney.sg/search.
Money-Saving Tips for Best Rates
- Negotiate: Leverage offers from multiple banks via Homejourney.
- Cashback: Target S$2,000+ promos for S$450k+ loans[1].
- Shorten Tenure: Save interest long-term.
- Monitor Rates: Use our real-time tracker for interest rate trigger.
Compare 2025 rates: Best Bank Refinancing Rates Comparison 2025 | Homejourney . WhatsApp our experts for free guidance.
FAQ: How to Calculate If Refinancing is Worth It
Q: What's the break-even formula?
A: Total refinancing costs divided by monthly savings. Under 24 months = worth it.
Q: Is now the best time refinance with SORA trends?
A: Yes if post-lock-in and rates dropped 0.5%; check chart above and Homejourney tool.
Q: HDB vs private refinancing differences?
A: HDB often cheaper to stay; private benefits more from bank switches[7].
Q: How much can I save on a S$1M loan?
A: 0.5% drop saves ~S$15k/year initially; use our calculator.
Q: Repricing or refinancing?
A: Reprice for speed; refinance for best rates. Details: Refinancing vs Repricing: Which is Better for You? Homejourney .
Ready to calculate if refinancing is worth it? Start with Homejourney's safe, verified tools at https://www.homejourney.sg/bank-rates. Link back to our pillar: Is Refinancing Worth It? Complete Singapore Guide | Homejourney for full coverage.
