How to Calculate If Refinancing Is Worth It | Homejourney

Refinancing your home loan is worth it if your monthly savings exceed the total costs within 2-3 years, typically when new rates drop by at least 0.5% below your current rate. Use Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator to run precise numbers for DBS, OCBC, UOB, and more.

This cluster article dives into the exact calculations Singapore homeowners need for smart refinancing decisions. It builds on our pillar guide, Step-by-Step Guide to Refinancing Your Mortgage in Singapore Step-by-Step Guide to Refinancing Your Mortgage in Singapore | Homejourney , providing tactical tools to assess when to refinance mortgage and identify the best time refinance.

Refinancing Fundamentals in Singapore

Refinancing means switching your entire home loan to a new lender or package for better terms, unlike repricing which stays with the same bank. It's ideal post-lock-in period end or when rates fall, but factor in costs like legal fees (S$2,000-S$4,000), valuation (S$500-S$1,500), and possible clawback penalties up to 1.5% of loan amount.

For HDB flats (min S$200,000 loan) or private properties (min S$300,000), eligibility starts at age 21 for Singaporeans, PRs, or foreigners. Homejourney simplifies this by letting you compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank in one place at https://www.homejourney.sg/bank-rates.

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

Follow these actionable steps to determine if refinancing saves money. This interest rate trigger method ensures you only switch when benefits outweigh costs.

Input Current Loan Details: Note your outstanding principal, monthly payment, interest rate, and remaining tenure. Example: S$500,000 balance, 3.5% rate, S$2,800/month, 20 years left.
Find New Rates: Check Homejourney's real-time rates. Suppose OCBC offers 1M SORA + 0.98% (effective ~3.2% in 2026).
Calculate New Payment: Use DBS or Citibank-style calculators. New payment: ~S$2,700/month (S$100 savings).
Tally Costs: Legal S$3,000 + Valuation S$1,000 + Processing S$500 = S$4,500 total.
Compute Break-Even: Months to recover = Total Costs / Monthly Savings = S$4,500 / S$100 = 45 months (~3.75 years).
Compare to Timeline: If >10 years left on loan and break-even < remaining tenure, proceed.

Pro Tip: If break-even exceeds 36 months, skip unless rates drop further. Test scenarios on Homejourney's tool.

Understanding SORA and Interest Rate Triggers

SORA (Singapore Overnight Rate Average), published daily by MAS, is the key benchmark for floating loans like 1M/3M Compounded SORA. Most banks peg refinancing packages to it, e.g., Year 1: SORA + 0.98%.

The chart below shows recent interest rate trends in Singapore:

As seen, if 3M SORA dips below your current effective rate by 0.5%, it's a strong refinance timing signal. Track live rates on Homejourney to time your move perfectly.

Real Singapore Example: HDB Refinancing Calculation

Meet Mr. Tan, owner of a 4-room HDB in Punggol (valuation S$600,000). Current DBS loan: S$400,000 outstanding at 3.8%, S$2,200/month, 22 years left. Post-lock-in, he spots UOB at 3M SORA + 1.0% (~3.1%).

New payment: S$2,100 (S$100 savings). Costs: S$3,500. Break-even: 35 months. With 22 years left, he saves ~S$50,000 in interest over life. Insider tip: Apply via Singpass on Homejourney for instant verification, skipping branch queues.

Another case: Private condo in Orchard (S$1.5M valuation). S$1M loan at 4%, refinance to HSBC fixed 2Y at 2.8%. Savings S$350/month, costs S$5,000, break-even 14 months—worth it!

Hidden Costs and Risks to Watch

Beyond basics, watch clawback (if early exit), admin fees, and TDSR impact. HDB requires min 20% equity; private 15-25% LTV per MAS rules. Always calculate net present value for accuracy.

Details in: Hidden Costs in Refinancing Mortgage Hidden Costs in Refinancing Mortgage: Step-by-Step Guide | Homejourney .

Best Time to Refinance: Timing Strategies

Lock-in Period End: 2-3 years typical; refinance 3-6 months before expiry.
Rate Drops: When SORA falls 0.5%+ below your rate.
Life Events: Income rise (better TDSR), equity build-up.
Market Peaks: Avoid refinancing during high SORA (check Homejourney charts).

Submit one application on Homejourney to get competing offers from all banks—let them fight for you.

Money-Saving Tips with Homejourney

Compare packages: DBS vs OCBC cash rebates (up to S$2,800 for S$1.5M+ loans).
Negotiate: Use multiple offers to leverage better spreads.
Combine goals: Refinance and tap equity for renovations via Aircon Services .
Track SORA: Time via https://www.homejourney.sg/bank-rates.

Disclaimer: This is general advice; consult Homejourney Mortgage Brokers or professionals. Rates fluctuate per MAS guidelines.

FAQ: How to Calculate If Refinancing Is Worth It

Q: What is a good interest rate trigger for refinancing?
A: Refinance when new rate is 0.5%-1% lower, with break-even under 3 years. Use Homejourney calculator.

Q: How much does refinancing cost in Singapore?
A: S$3,000-S$6,000 typically (legal, valuation, fees). HDB cheaper than private.

Q: When to refinance mortgage after lock-in?
A: 3-6 months before end for best rates; check When to Refinance Home Loan in Singapore: Homejourney Guide .

Q: Best bank refinancing rates 2026?
A: Compare live at https://www.homejourney.sg/bank-rates. See Best Bank Refinancing Rates Comparison 2026 | Homejourney .

Q: Is refinancing worth it for HDB?
A: Yes if savings > costs and tenure left > break-even, min S$200k loan.

Ready to calculate if refinancing is worth it? Start with Homejourney's safe, verified tools at https://www.homejourney.sg/bank-rates. Compare rates, run savings scenarios, and apply once to all banks via Singpass. For full guidance, return to our pillar: Step-by-Step Refinancing Guide. Trust Homejourney for transparent, user-first property decisions.