How to Calculate If Refinancing is Worth It: Homejourney Guide

To calculate if refinancing is worth it, compute your break-even point by dividing total refinancing costs by monthly savings from the lower interest rate. If the time to recover costs is shorter than your remaining loan tenure, refinancing saves money. Homejourney's refinance savings calculator simplifies this for Singapore homeowners seeking to reduce mortgage payment and cut mortgage costs.

This cluster article dives into the tactical steps for how to calculate if refinancing is worth it, building on our pillar guide to Singapore home loans. At Homejourney, we prioritize your safety and trust by verifying rates from DBS, OCBC, UOB, and more, helping you make confident decisions.

Refinancing Fundamentals in Singapore

Refinancing means switching your home loan to a new lender for better terms, like a lower interest rate, unlike repricing which stays with your current bank. In Singapore, most loans use SORA (Singapore Overnight Rate Average) as the benchmark, published daily by the Monetary Authority of Singapore (MAS). Refinancing suits you if market rates drop or your finances improve, potentially saving thousands over 20-30 years.

For HDB owners in areas like Punggol or private property buyers in Orchard, refinancing can save money refinancing amid 2025's fluctuating SORA rates around 3%. Always check lock-in periods (typically 2-3 years) to avoid penalties. Homejourney lets you compare refinancing rates from DBS Bank, OCBC Bank, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB Bank, Public Bank, Hong Leong Bank, and Citibank in one safe platform.

Step-by-Step: How to Calculate Refinancing Savings

Follow these actionable steps to determine if refinancing pays off. This framework uses real Singapore examples for HDB and private properties.

1. Gather your current loan details: Note outstanding balance (e.g., S$400,000), current rate (e.g., 3M SORA + 0.8% = 3.5%), monthly payment (S$2,200), and remaining tenure (25 years).
2. Find new rates: Use Homejourney bank rates for promos like OCBC's 1M SORA + 0.98% in year 1. New payment might drop to S$2,000.
3. Calculate monthly savings: S$2,200 - S$2,000 = S$200.
4. Tally costs: Legal fees (S$2,000-3,000, often subsidized), valuation (S$500-1,500), admin (S$200), possible clawback (1-1.5% if early). Total: ~S$4,000.
5. Compute break-even: Costs ÷ Savings = S$4,000 ÷ S$200 = 20 months. If under 2-3 years and outside lock-in, proceed.

Example: A S$1M private property loan in Tanjong Pagar refinancing from 3.8% to 3.2% saves S$350/month. Break-even at 18 months means S$30,000+ total savings over 25 years. Try Homejourney's mortgage calculator for instant results.

SORA Rates and Timing Your Refinance

SORA is the key benchmark for floating rates in Singapore, with 3M compounded SORA influencing most packages. Rates peaked in 2023 but eased in 2025 per MAS data. Refinance post-lock-in when rates fall 0.5%+ below yours.

The chart below shows recent interest rate trends in Singapore:

As seen, 6M SORA hovered at 2.8-3.2%. Track live rates on Homejourney to time perfectly. Insider tip: Apply 3 months before lock-in ends for seamless transition, avoiding rental gaps for investors.

Hidden Costs and Real Singapore Examples

Beyond basics, factor Total Debt Servicing Ratio (TDSR <55%) and Loan-to-Value (LTV) limits from MAS. HDB flats cap at 75-90% LTV; private at 55-75%. A Toa Payoh HDB owner refinancing S$500k might face S$2,500 legal fees but snag DBS cashback up to S$2,500.

Real example: S$800k outstanding on Sengkang BTO at 3.7%. Switch to UOB's promo: New rate 3.0%, saves S$280/month. Costs S$3,800; break-even 14 months. Total savings: S$67,200. Read more on hidden costs and refinancing vs repricing.

Actionable Tips to Maximize Savings

• Negotiate: Leverage quotes from multiple banks via Homejourney's multi-bank submission – one app gets offers from all.
• Combine rebates: OCBC offers up to S$2,800 cash for S$1.5M+ loans.
• Use Singpass: Auto-fill via MyInfo for faster approval on Homejourney.
• Shorten tenure: Reduce from 30 to 25 years to cut interest, if cashflow allows.
• Consult pros: Homejourney Mortgage Brokers provide free, personalized advice.

Refinancing takes 8-13 weeks; start early. For properties, search budgets on Homejourney property search.

FAQ: How to Calculate If Refinancing is Worth It

Q: When is refinancing not worth it?
A: If break-even exceeds 3 years, costs outweigh savings, or TDSR tightens eligibility.

Q: How much can I save refinancing in Singapore?
A: Typically S$100-500/month on S$500k-1M loans, per MAS SORA trends and bank promos.

Q: What's the difference between refinancing and repricing?
A: Refinancing switches banks (more options, ~13 weeks); repricing stays (faster, 5 weeks). Details in our guide.

Q: Can HDB owners refinance easily?
A: Yes, minimum S$200k outstanding; use HDB's portal alongside Homejourney for banks.

Q: Is now a good time (2025)?
A: If SORA dips below your rate, yes – track on Homejourney.

Disclaimer: This is general advice; consult professionals. Rates change; verify on Homejourney. Ready to save money refinancing? Use our refinance savings calculator, compare rates, and apply via Singpass today. Link back to our pillar: Singapore Home Loan Guide.