How to Calculate If Refinancing is Worth It | Homejourney Guide
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 the break-even period is shorter than your remaining loan tenure minus any lock-in periods, refinancing makes financial sense.[1][2]
This cluster article provides a tactical guide on how to calculate if refinancing is worth it, building on our pillar content, Complete Guide to Home Loan Refinancing in Singapore. At Homejourney, we prioritize your safety and trust by verifying rates from top banks like DBS, OCBC, and UOB, helping you make confident decisions without hidden surprises.
Refinancing Fundamentals: Know the Difference
Refinancing involves switching your home loan to a new lender for better rates or terms, while repricing stays with your current bank but changes the package. Refinancing typically takes 13 weeks and incurs higher fees like legal and valuation costs (often subsidized by banks), but offers more options from banks like DBS, OCBC, UOB, HSBC, and Standard Chartered.[1][2]
Repricing is faster (about 5 weeks) with lower fees, ideal if your current bank like UOB has competitive refinancing rates comparison.[1] Use Homejourney's bank rates page at https://www.homejourney.sg/bank-rates to compare best bank refinance Singapore options instantly.
Current SORA-based rates from top banks: UOB offers 3M Compounded SORA + 0.70% for Years 1-2 (min S$250,000 loan), OCBC 1M SORA + 0.98% for Year 1.[1][4] Always check for cash rebates, e.g., UOB's S$2,000 for S$450,000+ loans on completed private properties.[1]
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 Your Current Loan Details: Note monthly payment, interest rate, remaining tenure, and outstanding balance. Example: S$800,000 balance, 3.5% rate, S$4,000 monthly, 20 years left.
- Find New Rates: Compare top banks refinancing like DBS OCBC UOB refinance offers on Homejourney. Assume new rate: 3.0% (e.g., UOB promo).[1]
- Calculate Monthly Savings: New payment = (Loan x Rate/12) / (1 - (1 + Rate/12)^(-Months)). Savings = Old payment - New (e.g., S$4,000 - S$3,700 = S$300/month).
- Tally Costs: Legal fees (S$2,000-S$3,000, often subsidized), valuation (S$500-S$1,500), clawback if breaking lock-in (1-1.5% of loan), processing (S$200-S$500). Total: ~S$3,000-S$6,000.[2]
- Compute Break-Even: Costs / Monthly Savings = Months to recover (e.g., S$5,000 / S$300 = 16.7 months or 1.4 years).
- Assess Timeline: If break-even < remaining tenure - lock-in (e.g., 1.4 years < 20 - 2 = 18 years), proceed. Factor TDSR (60% debt cap) and LTV rules from MAS/HDB.[2]
Pro tip: Use Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator for instant results with Singpass integration.
Real Singapore Example: HDB vs Private Property
For an HDB flat in Tampines (e.g., S$600,000 valuation), refinancing from 3.8% to 3.0% on S$500,000 loan saves S$250/month. Costs: S$4,000 (subsidized legal S$1,500). Break-even: 16 months. Worth it if >2 years left post-lock-in.[9]
Private condo in Orchard (S$1.5M loan at 3.6% to 2.8% UOB promo): Saves S$600/month, costs S$5,500, break-even 9 months. Add UOB's S$2,500 cashback – net cost drops to S$3,000.[1] Insider tip: Time before CNY for extra rebates like OCBC's S$2,800 + S$388.[4]
Understanding SORA and Rate Trends
SORA (Singapore Overnight Rate Average), published by MAS, is the key benchmark for floating rates in Singapore, replacing fixed rates for transparency. 3M Compounded SORA is common for home loans.[1][4]
The chart below shows recent interest rate trends in Singapore:
As seen, rates have stabilized post-2023 peaks, making now ideal for refinance offers if your rate exceeds 3.5%.[1][4] Track live on Homejourney.
Hidden Costs and Timing Strategies
Beyond basics, watch clawback (if prepaying early), processing fees, and potential higher rates post-promo. Read our guide on Homejourney: Guide to Hidden Costs of Best Banks for Mortgage Refinancing You Ne... for details.[2]
- Best Time: End of 2-3 year lock-in, when SORA drops (check chart), or regulatory shifts like TDSR tweaks.
- Negotiate: Leverage offers from DBS/OCBC/UOB – Homejourney's multi-bank submission gets banks competing.
- Combine Goals: Shorten tenure for interest savings or withdraw equity for renovations (LTV limits apply).
Compare refinancing rates comparison safely on https://www.homejourney.sg/bank-rates. See Best Bank Refinancing Rates Comparison 2025 | Homejourney Guide for 2025/2026 updates.[4]
Homejourney Makes It Safe and Simple
Submit one application via Singpass to DBS, OCBC, UOB, HSBC, Maybank, CIMB, and more – receive multiple refinance offers without branch visits. Our platform verifies data for faster approvals, prioritizing your security.[1][4]
Disclaimer: This is general advice; consult professionals for personalized guidance. Rates as of Dec 2025; subject to change per MAS/HDB rules.
FAQ: How to Calculate If Refinancing is Worth It
Q: What's the minimum savings needed for refinancing?
A: Aim for at least S$200/month to justify costs; use break-even < 2 years rule.[2]
Q: Can HDB owners refinance?
A: Yes, post-MOP, subject to HDB LTV/TDSR. Check eligibility on Homejourney calculator.[9]
Q: How do I compare DBS OCBC UOB refinance rates?
A: Visit https://www.homejourney.sg/bank-rates for real-time best bank refinance Singapore comparison.[1][4]
Q: What if I'm in lock-in?
A: Calculate clawback vs savings; wait if break-even exceeds lock-in. See When Is the Right Time to Refinance Your Home Loan? | Homejourney Guide .[2]
Q: Refinancing or repricing?
A: Refinance for better rates across banks; repricing if staying put. Details in Refinancing vs Repricing: Which is Better for You? Homejourney .[2]
Ready to save? Start with Homejourney's tools at https://www.homejourney.sg/bank-rates and link back to our pillar guide for full coverage. Your trusted partner for safe property decisions.
