How to Calculate If Refinancing is Worth It | Homejourney

To determine if refinancing your home loan is worth it, calculate the break-even point by dividing total refinancing costs by monthly savings from the new lower interest rate. If the break-even period is shorter than your remaining loan tenure minus lock-in periods, refinancing typically saves money. Homejourney makes this easy with our free refinancing calculator at https://www.homejourney.sg/bank-rates#calculator, where you can compare rates from DBS, OCBC, UOB, and more.

This cluster article dives into the tactical steps for how to calculate if refinancing is worth it, building on our pillar guide to Singapore home loans. At Homejourney, we prioritize your financial safety by verifying rates from partner banks like HSBC, Standard Chartered, Maybank, and others, ensuring transparent decisions in a trusted environment.

Refinancing vs Repricing: Key Differences Explained

Refinancing means switching your entire home loan to a new bank or package, often for better rates but with costs like legal fees (S$2,000-S$3,000), valuation (S$500-S$1,500), and possible clawback penalties up to 1.5% of prepaid principal. Repricing (or reprice mortgage) stays with your current bank, negotiating a lower rate with minimal fees (often under S$500), ideal if your lock-in has ended.

The refinance difference lies in flexibility: refinancing lets you switch banks or stay for packages like 1M/3M Compounded SORA + 0.98% (Year 1 at OCBC), while repricing suits minor adjustments. Use Homejourney's comparison tool at https://www.homejourney.sg/bank-rates to see real-time rates from all major banks.

For deeper insights on refinancing vs repricing, check our related article: Refinancing vs Repricing: Which Saves You More in 2026? | Homejourney .

Step-by-Step: How to Calculate If Refinancing is Worth It

Follow these actionable steps to crunch the numbers accurately for your HDB flat or private property.

1. Gather your current loan details: Note monthly payment, interest rate (e.g., 3M SORA + 1.2% = 3.8% total), remaining tenure (e.g., 25 years), and outstanding principal (e.g., S$800,000).
2. Find new rates: On Homejourney, compare loan repricing options. Example: Switch from DBS 3.8% to UOB 3M SORA + 0.98% (assume 3.3% total).
3. Calculate monthly savings: Use formula: Current payment - New payment. For S$800,000 at 25 years: Current ~S$4,200; New ~S$3,900. Savings = S$300/month.
4. Tally costs: Legal S$2,500 + Valuation S$800 + Clawback 1% of S$100,000 prepaid = S$3,300 total.
5. Compute break-even: Total costs ÷ Monthly savings = S$3,300 ÷ S$300 = 11 months.
6. Compare to timeline: If remaining tenure > break-even + 12-24 months buffer (for rate stability), proceed.

This method mirrors calculators from DBS and Citibank, ensuring precision. Test it yourself on Homejourney's tool for instant results with Singpass integration.

Understanding SORA and Current Rate Trends

SORA (Singapore Overnight Rate Average), published daily by MAS, is Singapore's key benchmark for floating home loans, replacing outdated fixed deposits. Most packages peg to 1M/3M Compounded SORA, currently around 3.0-3.2% base (as of Jan 2026).

The chart below shows recent interest rate trends in Singapore:

As seen in the chart, SORA has stabilized post-2025 peaks, making now ideal for locking lower spreads. Track live rates on Homejourney to time your reprice mortgage perfectly.

Real Singapore Example: HDB Flat Refinancing Math

Consider a Tampines HDB owner with S$500,000 outstanding on a 20-year DBS loan at 3.9% (monthly S$2,950). Refinancing to Standard Chartered 3M SORA + 0.88% (3.18% total) drops payment to S$2,650 (savings S$300).

Costs: S$2,200 legal + S$500 valuation + S$2,000 clawback = S$4,700. Break-even: 4,700 ÷ 300 = 15.7 months. With 18 years left and no lock-in, net savings exceed S$50,000 over tenure. Insider tip: HDB loans have no clawback but higher rates (2.6% fixed); bank refinancing shines for larger sums.

Hidden costs detailed in our guide: Hidden Costs: Refinancing vs Repricing - Which to Choose in 2026 | Homejourney .

Timing, Risks, and Money-Saving Tips

Best time: 6-12 months before lock-in ends (typically 2-3 years). Avoid if SORA rises >0.5%. Factor TDSR (60% debt cap) and LTV limits (75% for first property).

• Negotiate: Leverage Homejourney multi-bank apps—submit once, get offers from DBS, OCBC, UOB, HSBC.
• Cash rebates: OCBC offers up to S$2,800 for S$1.5M+ loans.
• Combine goals: Refinance while searching properties via https://www.homejourney.sg/search.

Disclaimer: This is general advice; consult Homejourney Mortgage Brokers for personalized review. Rates fluctuate per MAS guidelines.

Why Choose Homejourney for Refinancing?

Homejourney verifies partner bank rates daily, letting banks compete for you. Apply via Singpass for instant verification, track SORA live, and calculate savings risk-free. Compare top 2026 refinancing banks: Best Banks for Mortgage Refinancing in Singapore 2026 | Homejourney Guide .

Post-refinance, maintain your investment with services like Aircon Services .

FAQ: How to Calculate If Refinancing is Worth It

Q: What's the main difference between refinancing and repricing?
A: Repricing stays with your bank (low cost); refinancing switches banks for better packages but higher fees. Calculate both on Homejourney.

Q: How much does refinancing cost in Singapore?
A: S$2,000-S$5,000 typically, including legal, valuation, and penalties. Use our calculator to net out savings.

Q: Is now a good time to refinance my HDB loan?
A: Yes if SORA trends stable (check our chart) and your rate >3.5%. Minimum S$200,000 outstanding.

Q: Can I refinance with bad credit?
A: Possible via partners like Maybank, but TDSR applies. Pre-check eligibility on Homejourney.

Q: How long does refinancing take?
A: 2-4 weeks with Homejourney's multi-bank system vs. months branch-hopping.

Ready to see if refinancing saves you money? Start with Homejourney's bank rates comparison at https://www.homejourney.sg/bank-rates and link back to our full home loans pillar for more. Your trusted path to smarter property decisions begins here.