How to Calculate If Refinancing is Worth It | Homejourney

Refinancing your home loan is worth it if monthly savings exceed total refinancing costs within 2-3 years, typically calculated via break-even analysis on platforms like Homejourney.[1][2][3]

Homejourney prioritizes your safety and trust by verifying rates from DBS, OCBC, UOB, and more, helping you avoid hidden fees refinance pitfalls. This cluster article dives into precise calculations for Singapore homeowners, linking back to our pillar guide on Singapore Mortgage Essentials for full coverage.

Refinancing Fundamentals in Singapore

Refinancing means switching your entire home loan to a new bank for better rates or terms, unlike repricing which stays with the current bank. In Singapore, refinancing suits those outside lock-in periods seeking lower SORA-based rates from banks like HSBC or Standard Chartered.[1][5]

Current 2026 rates start at 1.35%-1.78% fixed for Year 1 on loans over S$500,000, per bank promotions.[2] Use Homejourney's bank rates comparison to view live offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank.

SORA (Singapore Overnight Rate Average), published daily by MAS, underpins most floating rates. 3M Compounded SORA + 0.70% p.a. is common for promotional packages.[1][5]

The chart below shows recent interest rate trends in Singapore:

As seen in the chart, SORA fluctuations make timing critical—refinance when rates dip for maximum savings.

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

Follow this actionable framework to determine viability, using real Singapore examples. Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator automates this.

Calculate Monthly Savings: Subtract new monthly payment from current. Example: S$1M loan, 25 years left. Current: 3M SORA +1.5% (~S$4,500/month). New: 3M SORA +0.8% (~S$4,000/month). Savings: S$500/month.[2][3]
Tally Refinancing Costs: Include legal fees refinancing (S$2,000-S$3,000), valuation fee (S$500-S$1,500 for private properties), and clawback penalty (1.5% of loan if within lock-in, often waived on sale).[1][2]
Factor Cash Rebates: New banks offer S$2,000-S$2,800 for loans >S$500k, offsetting costs.[1][2][5]
Compute Break-Even Point: Total costs ÷ monthly savings = months to break even. Example: S$5,000 costs - S$2,500 rebate = S$2,500 net. S$2,500 ÷ S$500 = 5 months.
Project Total Savings: (Savings × remaining months) - net costs. For 20 years left: (S$500 × 240) - S$2,500 = S$117,500 saved.

If break-even <24 months and you plan to stay long-term, proceed. Always verify with Homejourney for personalized math.

Singapore-Specific Refinancing Costs Breakdown

Hidden fees refinance can erode gains—don't overlook them. Typical costs for a S$1M private property refinance:

Legal fees: S$2,200-S$3,500 (conveyancing).[2]
Valuation fee: S$688 (HDB) to S$1,500 (private).[1]
Clawback penalty: 1.5% (~S$15,000) if early redemption, but many floating packages waive 50-100% on sale.[2]
Admin fees: S$200-S$500.
Disbursement fees: S$500-S$1,000.

Total: S$5,000-S$8,000 pre-rebates. UOB offers S$2,000-S$2,500 cash for >S$450k loans; OCBC up to S$2,800 + S$388.[1][5] Net cost often <S$3,000. See our Hidden Costs of Refinancing You Need to Know | Homejourney ">Hidden Costs of Refinancing for details.

HDB flats require min S$200k loan; private S$300k. Check LTV/TDSR limits via HDB/URA—Homejourney verifies eligibility instantly.[10]

Timing and Strategies for Maximum Savings

Refinance post-lock-in (2-3 years typical).[2] Monitor SORA via Homejourney's real-time tracker. Negotiate: Leverage competing offers—submit one app on Homejourney to get bids from all major banks.

Insider tip: Apply via Singpass for instant verification, speeding approval to 7-21 days. Combine with property search on Homejourney property search if upgrading.

Compare vs repricing in Refinancing vs Repricing: Which Saves More Money in 2026? ">Refinancing vs Repricing. For best rates, view Best Bank Refinancing Rates Comparison 2026: Homejourney Guide ">2026 Bank Rates Comparison.

Real Example: S$800k HDB Refinance

Owner in Tampines: Current DBS 3M SORA +1.2% (S$3,200/month). Switches to UOB promo: Year 1 SORA +0.70% (S$2,900/month). Savings: S$300.

Costs: Legal S$2,500, valuation S$688, no clawback (post-lock-in). Rebate: S$2,000. Net: S$1,188. Break-even: 4 months. 15 years left: ~S$52,000 saved. Homejourney users report similar wins safely.

FAQ: How to Calculate If Refinancing is Worth It

What is the break-even formula for refinancing?
(Total refinancing costs - rebates) ÷ monthly savings = months to recover. Aim for under 24 months.[3]

Are clawback penalties always charged?
No—waived if post-lock-in or on sale for floating rates. Check your LO.[2]

How much are legal fees refinancing in Singapore?
S$2,000-S$3,500 typically, often subsidized by new bank.[1][5]

Is refinancing worth it if rates drop 0.5%?
Yes, for loans >S$500k with 10+ years left—savings often S$50k+ after costs.[2]

Where to compare safe refinancing rates?
On Homejourney bank-rates—one app, multiple offers, Singpass-ready.

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

Ready to calculate your savings? Use Homejourney's tools at https://www.homejourney.sg/bank-rates, submit via Singpass, and let banks compete. Explore our pillar Singapore Mortgage Guide for more. Your safe property journey starts here.