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 any lock-in periods, refinancing makes financial sense.

This cluster article focuses on the precise calculations for mortgage refinancing Singapore, building on our pillar guide Mortgage Refinancing Singapore 2026: Homejourney Guide Mortgage Refinancing Singapore 2026: Homejourney Guide . Homejourney prioritizes your safety and trust by verifying rates from DBS, OCBC, UOB, and more, helping you make confident decisions without hidden surprises.

Refinancing vs Repricing: Key Differences

Refinancing involves switching your home loan to a new bank for better rates, longer tenures, or cashouts, but incurs costs like legal fees and valuations. Repricing stays with your current bank to negotiate lower rates without changing lenders, avoiding most fees.

In Singapore, refinancing suits those whose lock-in period has ended (typically 2-3 years) and rates have dropped. For example, if your current rate is 3M SORA + 1.5% and UOB offers 3M SORA + 0.70% for Year 1[1], calculate potential savings. See our detailed comparison in Refinancing vs Repricing: Which is Better for You? Refinancing vs Repricing: Which is Better for You? | Homejourney .

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

Follow these actionable steps to run your own analysis. Use Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator for instant results.

Gather your current loan details: Outstanding balance (e.g., S$500,000), monthly payment (e.g., S$2,800), interest rate (e.g., 3M SORA + 1.2%), remaining tenure (e.g., 25 years), and lock-in expiry.
Compare new rates: Check offers from DBS, OCBC, UOB, HSBC on Homejourney at https://www.homejourney.sg/bank-rates. Example: New rate 3M SORA + 0.70% could drop monthly payment to S$2,500[1].
Estimate monthly savings: S$2,800 - S$2,500 = S$300.
Calculate total costs: Legal fees (S$2,000-S$4,000, often subsidized for loans >S$400K private/S$300K HDB[4]), valuation (S$500-S$1,500, sometimes covered), clawback penalties if within lock-in.
Find break-even months: Total costs (e.g., S$3,000) ÷ monthly savings (S$300) = 10 months.
Assess timeline: If break-even < remaining tenure and you plan to stay long-term, proceed.

Example: For a S$1M private property loan in Tanjong Pagar, refinancing from 4% to 3% saves S$1,200/month. With S$3,500 costs, break-even is 3 months—worth it if holding 20+ years.

Understanding SORA and Current Rates

SORA (Singapore Overnight Rate Average), published by MAS, is the key benchmark for floating rates in Singapore, replacing SIBOR. Most banks peg to 3M Compounded SORA.

The chart below shows recent interest rate trends in Singapore:

As seen, with SORA stable around 3%, packages like UOB's 3M SORA + 0.70% (Year 1-2)[1] or OCBC's 1M SORA + 0.98%[5] beat older rates. Track live rates on Homejourney to time your refinance home loan.

Hidden Costs and Real Singapore Examples

Banks subsidize fees for larger loans: UOB for S$450K+ private properties[1], OCBC for S$300K+ private/S$200K+ HDB[5]. But factor in:

Legal fees: S$1,500-S$3,000 (subsidized).
Valuation: S$588 for HDB, up to S$2,000 private.
Clawback: 1.5% if prepaying early.
Processing: Minimal.

Real example: HDB flat in Punggol (S$600K loan). Current payment S$3,200 at SORA+1.4%. Refinance to DBS: S$2,900/month. Costs S$2,500 (subsidized). Savings S$300/month, break-even 8 months. See Hidden Costs of Mortgage Refinancing Hidden Costs of Mortgage Refinancing You Need to Know | Homejourney .

When to Refinance: Timing Tips

Refinance 3-4 months before lock-in ends to avoid rate hikes. With SORA trends stable[chart], now's ideal if your spread exceeds 1%. Use Homejourney to submit one application via Singpass to DBS, OCBC, UOB, HSBC, Standard Chartered—get competing offers fast.

Best for: Loans >S$250K[1], remaining tenure >5 years. Avoid if planning to sell soon.

Actionable Steps to Refinance via Homejourney

Visit https://www.homejourney.sg/bank-rates to compare rates.
Use calculator for savings projection.
Apply with Singpass—auto-verified, multi-bank submission.
Receive offers, negotiate (Homejourney brokers assist).
Complete in 2-4 weeks.

Disclaimer: This is general advice. Consult professionals; rates change. Homejourney verifies data for your safety.

FAQ: How to Calculate If Refinancing is Worth It

Q: What's the formula for break-even in refinancing?
A: Total costs ÷ (Old monthly - New monthly payment) = months to recover. Use Homejourney's tool.

Q: Is refinancing worth it for HDB loans under S$300K?
A: Often yes if subsidies cover fees; check bank promos like UOB S$2,000 cash for S$450K+[1].

Q: How does repricing compare?
A: Cheaper (no fees) but limited to current bank. Full guide: Refinancing vs Repricing: Which Saves You More Money? .

Q: Current best rates?
A: 3M SORA +0.70% (UOB Year1)[1]. Compare live on Homejourney.

Q: Can I refinance during rising rates?
A: Lock in fixed rates if expecting hikes; track via our chart.

Ready to save? Calculate now at https://www.homejourney.sg/bank-rates and link to properties in budget via https://www.homejourney.sg/search. For full refinancing guide, visit our pillar content.