How to Calculate If Refinancing is Worth It: Homejourney Guide

To calculate if refinancing is worth it, subtract total refinancing costs (like legal fees and valuation) from monthly savings, then divide by the monthly savings to find the break-even period. If this period is shorter than your remaining loan tenure, refinancing makes financial sense.

This cluster article dives deep into the calculation process for Singapore homeowners, building on our pillar guide to Singapore Home Loans: The Complete Guide. At Homejourney, we prioritize your safety and trust by verifying rates from DBS, OCBC, UOB, and more, helping you make confident decisions without hidden surprises.

What is Refinancing and When Does It Make Sense?

Refinancing means switching your home loan to a new lender for better terms, like lower rates or cashouts, unlike repricing which stays with your current bank.^[1] In Singapore, it's ideal post-lock-in (typically 2-3 years) when SORA rates drop or promotions offer rebates.^[1]

For HDB owners in mature estates like Toa Payoh or private condo buyers in Orchard, refinancing can save thousands if your current rate exceeds 3M SORA + 0.70% p.a., as seen in UOB's offers.^[2] Homejourney's platform lets you compare best bank refinance Singapore options safely, with Singpass integration for quick eligibility checks.

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

Follow these actionable steps to run your own analysis. Use Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator for instant results.

Gather Current Loan Details: Note your outstanding principal, monthly repayment, interest rate, and remaining tenure. Example: S$500,000 loan at 3.5% p.a., S$2,800/month, 20 years left.
Find New Loan Rates: Check refinancing rates comparison on Homejourney for top banks refinancing like DBS (3M SORA + 0.60%), OCBC (1M SORA + 0.98%), UOB.^[2][4] New payment: S$2,500/month.
Calculate Monthly Savings: S$2,800 - S$2,500 = S$300/month.
Tally Costs: Legal fees (S$2,000-3,000, often subsidized), valuation (S$500-1,500), clawback (1-1.5% if early), admin fees. Total: ~S$4,000.^[1]
Compute Break-Even: Costs ÷ Savings = S$4,000 ÷ S$300 = 13 months.
Compare to Tenure: If <20 years remaining, proceed. Factor total interest savings over tenure.

Real Example: A S$1M condo loan refinanced from 3.8% to 3M SORA + 0.70% saves S$450/month after S$5,000 costs—break-even in 11 months, netting S$80,000 over 15 years.^[1][2]

Understanding SORA and Current Rates

SORA (Singapore Overnight Rate Average) is the MAS-published benchmark for most floating loans, replacing fixed rates for transparency.^[2][4] 3M Compounded SORA + margin determines your effective rate.

The chart below shows recent interest rate trends in Singapore:

As shown, with 3M SORA around 2.8-3.0% in late 2025, packages like UOB's Year 1: 3M SORA + 0.70% yield ~3.5%, beating older fixed rates.^[2] Track live rates on Homejourney to time your move.

Hidden Costs and How to Minimize Them

Beyond basics, watch for TDSR recalibration (max 55% debt-to-income) and LTV limits (up to 75% for first loans).^[1] Banks subsidize fees in refinance offers, e.g., OCBC's CNY rewards up to S$2,800 cashback.^[4]

Legal/Valuation: Negotiate subsidies—most DBS OCBC UOB refinance promos cover 100%.
Clawback: Avoid by waiting out 2-3 year lock-in.^[1]
Processing: Free via Homejourney's multi-bank submission.

Read our deep dive: Hidden Costs of Best Banks for Mortgage Refinancing You Need to Know | Homejourn... .

Timing Your Refinance: Lock-In, Rates, and Promotions

Refinance at lock-in expiry or when SORA dips 0.5%+. With 13-week processing, start 4 months early.^[1] UOB offers S$2,000+ cash for S$450k+ loans; OCBC ties rewards to loan size.^[2][4]

Insider tip: Apply via Homejourney at https://www.homejourney.sg/bank-rates—one form gets offers from DBS, OCBC, UOB, HSBC, Standard Chartered, letting banks compete.

Actionable Tips to Maximize Savings

Compare best bank refinance Singapore on Homejourney, negotiate using multiple offers, and pair with goals like shortening tenure. For HDB upgraders, check CPF usage via HDB portal alongside bank options.^[6]

Shorten tenure to cut interest (e.g., 25 to 20 years saves 20% total cost).
Leverage Singpass for 50% faster approval.
Combine with property search on https://www.homejourney.sg/search for budget fits.

FAQ: How to Calculate If Refinancing is Worth It

1. What is a good break-even period for refinancing?
Under 12-18 months is ideal, ensuring savings outweigh costs before your loan ends.^[1]

2. How do DBS, OCBC, UOB refinancing rates compare?
Year 1: Often 3M/1M SORA + 0.60-0.98%. Use Homejourney for live refinancing rates comparison.^[2][4]

3. Can I refinance an HDB loan?
Yes, minimum S$200k via banks like Maybank or CIMB. Check LTV/TDSR on Homejourney calculator.

4. What documents do I need?
NRIC, payslips, tax statements, property title. Singpass auto-fills via Homejourney.

5. Is refinancing worth it if rates are stable?
Yes for cash rebates or tenure tweaks. Calculate via our tool.

Disclaimer: This is general advice. Consult Homejourney Mortgage Brokers or professionals for personalized guidance. Rates as of Dec 2025; subject to change per MAS rules.

Ready to see if refinancing saves you money? Start with Homejourney's safe, verified comparison at https://www.homejourney.sg/bank-rates. Compare DBS OCBC UOB refinance offers, calculate break-even, and apply once—building trust one secure step at a time. Link back to our pillar for full home loan mastery.