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 your monthly savings from the lower interest rate. If you plan to stay in the property longer than this period and rates are favorable, refinancing often pays off.

This cluster article dives deep into the calculations for Singapore homeowners, building on our pillar guide to Singapore home loans. At Homejourney, we prioritize your financial safety with transparent tools like our bank rates comparison, helping you make trusted decisions without the hassle of multiple bank visits.

Refinancing vs Repricing: Key Differences

Understanding refinancing vs repricing is crucial before calculations. Repricing (or reprice mortgage) stays with your current bank, negotiating a lower rate without switching. It's cheaper with no legal fees but limited to your bank's offers.

Refinancing means switching banks for better rates, packages, or cash rebates. It involves more costs but accesses competitive deals from DBS, OCBC, UOB, and others. For details on refinance difference, see our related article: Refinancing vs Repricing: Which is Better for You? | Homejourney .

Repricing suits if you're happy with your bank and lock-in ended. Refinancing shines when switch banks or stay options show big savings via Homejourney's multi-bank comparison.

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

Follow these actionable steps to crunch the numbers accurately for your Singapore property.

Gather Current Loan Details: Note your outstanding principal, current interest rate (e.g., 3M SORA + 0.98%), monthly payment, and remaining tenure. Use DBS's repayment calculator for precision[1].
Find New Rates: Compare on Homejourney bank-rates. Example: Current 3.5% vs new OCBC 1M SORA + 0.98% (around 3.2% as of 2026)[3].
Estimate Monthly Savings: Input into Citibank-style refinancing calculator: $2,000 current payment minus $1,900 new = $100 savings[2].
Calculate Total Costs: Legal fees ($2,000-$3,000), valuation ($500-$1,500), discharge fee ($200-$500), possible clawback (1-3 months interest if early exit).
Compute Break-Even: Costs ÷ Monthly Savings = Months to recover. E.g., $5,000 ÷ $100 = 50 months (4.2 years).

If break-even is under your remaining tenure and you stay longer, proceed. Homejourney's calculator at bank-rates#calculator automates this with Singpass integration.

Singapore-Specific Costs and Examples

In Singapore, HDB flats need min $200k loan for refinancing; private properties $300k[3]. Real example: $800k HDB loan, 25 years left, current rate 3.8%, monthly $4,200.

New rate at UOB: 3M SORA + 0.80% (~3.1%), new monthly $3,950. Savings: $250/month. Costs: $4,500 total. Break-even: 18 months. Annual savings post-break-even: $3,000.

Hidden pitfalls: CPF clawback if using Ordinary Account funds early. Always check MAS guidelines and use Homejourney to track real-time SORA rates for timing.

Understanding SORA and Rate Trends

SORA (Singapore Overnight Rate Average) is the key benchmark for floating loans in Singapore, published daily by MAS. Most packages peg to 1M/3M Compounded SORA + bank spread[3].

The chart below shows recent interest rate trends in Singapore:

As seen, if SORA dips below 3%, refinancing gains traction. Track live on Homejourney to time your loan repricing.

When to Refinance: Timing and Strategies

Best after lock-in (2-3 years typical). With 2026 rates stabilizing post-global shifts, now's ideal if your rate exceeds market by 0.5%+. Negotiate cash rebates: OCBC offers up to $2,800 for $1.5M+ loans[3].

Pro tip: Submit one application via Homejourney to DBS, OCBC, HSBC, Standard Chartered, Maybank, and more—let banks compete. Saves time, boosts offers. Link to best rates comparison: Best Bank Refinancing Rates Comparison 2026 | Homejourney .

Hidden Costs and Risks

Beyond basics: Processing fees ($100-$300), admin costs. If refinancing fails, penalty interest applies. For HDB, ensure no Minimum Occupation Period issues.

Disclaimer: This is general advice. Consult Homejourney mortgage brokers or professionals for personalized assessment. Rates fluctuate; verify on Homejourney.

Actionable Tips to Maximize Savings

Compare 5+ banks on Homejourney before deciding switch banks or stay.
Use our eligibility calculator to confirm new LTV/TDSR compliance.
Time around rate reviews (every 1-3 months for SORA).
Combine with property search on Homejourney search if upgrading.
Post-refinance, maintain via aircon services for holistic ownership.

FAQ: How to Calculate If Refinancing Is Worth It

Q: What's the main difference between refinancing and repricing?
A: Repricing renews with your current bank; refinancing switches for potentially better deals but higher costs. Calculate both on HomejourneyRefinancing vs Repricing: Which Saves You More in 2026? | Homejourney .

Q: How much does refinancing cost in Singapore?
A: $3,000-$6,000 typically, including legal and valuation fees. Use our tool to factor in precisely.

Q: Is refinancing worth it if rates drop 0.3%?
A: Depends on loan size and tenure. For $1M loan, it could save $200+/month—break-even ~2 years.

Q: Can I refinance my HDB loan?
A: Yes, if >$200k outstanding and lock-in ended. Apply via Homejourney for multi-bank offers.

Q: How do I start?
A: Visit Homejourney bank-rates, use Singpass, get quotes instantly.

Ready to see if refinancing is worth it? Start with Homejourney's safe, verified tools today. Compare rates, calculate savings, and apply securely—prioritizing your trust and peace of mind. For full coverage, return to our pillar on Singapore home financing.