How to Calculate If Refinancing is Worth It: Homejourney Guide
Refinancing your home loan is worth it if monthly savings exceed total costs within 2-3 years, calculated as (current monthly payment - new monthly payment) x 12 divided by all refinancing fees.[1][2][3] Homejourney simplifies this with our refinancing calculator, letting you compare rates from DBS, OCBC, UOB and more instantly.
This cluster article dives into the exact math for Singapore homeowners, building on our pillar guide to Refinancing vs Repricing. Discover actionable steps to assess if switching banks saves you money while prioritizing safety and transparency at Homejourney.
What is Refinancing and When Does It Make Sense?
Refinancing means taking a new home loan from another bank (like DBS to OCBC) to replace your existing one, often for lower rates or cashouts.[1][4] Unlike repricing with your current bank, it involves full legal transfer but can yield better packages from competitors like UOB's S$2,000 cashback for S$450k+ loans.[1]
It makes sense when SORA rates drop or your credit improves. For HDB flats (min S$200k loan) or private properties (min S$250k-S$300k), check if new rates like 3M Compounded SORA + 0.70% beat your current fixed rate.[1][4] Homejourney's bank rates page shows live offers from HSBC, Standard Chartered, Maybank and partners.
Step-by-Step: How to Calculate If Refinancing is Worth It
Follow these steps using real Singapore examples. Assume a S$1M outstanding loan on a private condo in Orchard, 20 years left, current 3.5% rate (S$5,530/month).
- Input Current Loan Details: Use DBS or CPF calculators for baseline.[2][8] Monthly payment = Principal x [r(1+r)^n] / [(1+r)^n - 1], where r = monthly rate, n = months.
- Get New Quotes: On Homejourney, compare refinance rates—one-click to DBS (3M SORA +0.70% Year 1), OCBC (1M SORA +0.98%). New payment: ~S$5,000/month.[1][4]
- Calculate Monthly Savings: S$5,530 - S$5,000 = S$530/month or S$6,360/year.
- Tally Costs: Legal fees (S$2k-S$3k), valuation (S$500-S$1k), clawback (1-2% if in lock-in), processing (S$200).[1]
- Break-Even Point: Total costs / annual savings. E.g., S$5,000 costs / S$6,360 = 9 months. Worth it if you stay >2 years.
Pro tip: Factor TDSR (60% debt-to-income) and LTV limits—refinancing can't exceed original quantum.[2] Test scenarios on Homejourney's mortgage calculator.
Singapore-Specific Costs and Hidden Fees
In Singapore, refinancing HDB requires HDB approval; private needs URA caveats cleared. Expect 1-1.5% prepayment penalty if in 2-year lock-in (e.g., UOB allows 20% free prepay).[1] Cashback like OCBC's S$2,500 for S$1M+ offsets fees but deducts from savings calc.[4]
Real example: Refinancing S$800k HDB in Punggol from 3.2% to 3M SORA +0.80%. Savings S$400/month, but S$4k total costs = 10-month break-even. Track SORA via MAS—Homejourney shows real-time 3M/6M rates.[1]
The chart below shows recent interest rate trends in Singapore:
As seen, SORA peaked mid-2025 but eased, favoring 2026 refinances. Always verify with Straits Times for market updates.
Break-Even Analysis: Real Singapore Examples
| Scenario | Current Rate | New Rate (e.g., UOB) | Monthly Savings | Total Costs | Break-Even | Worth It? |
|---|---|---|---|---|---|---|
| HDB S$500k, 25yrs | 3.5% | SORA+0.70% | S$250 | S$3,500 | 14 mths | Yes, if >2yrs |
| Private S$1.2M, 20yrs | 4.0% | SORA+0.98% | S$650 | S$6,000 | 11 mths | Yes |
| Short Lock-in Left | 3.0% | SORA+1.0% | S$100 | S$2,500 | 25 mths | No |
Data from bank promos; use Homejourney to customize.[1][4] Insider tip: Time post-lock-in expiry—avoid clawback on Toa Payoh HDBs where values rose 10% YOY.
Timing Your Refinance: Lock-In and Rate Strategies
Exit 2-3 year lock-ins penalty-free. With SORA stable ~3%, refinance if spread >1% better (e.g., Citibank packages).[3] Start 3 months early—process takes 4-6 weeks: valuation, legal, disbursement.
- Submit via Homejourney's multi-bank app—one form to DBS, OCBC, UOB, HSBC.
- Singpass for instant verification, no branch visits.
- Let banks compete: Receive 3-5 offers fast.
Read our How Homejourney Makes Refinancing Easier.
Actionable Tips: Negotiate and Maximize Savings
1. Compare on Homejourney bank-rates—toggle fixed vs SORA.
2. Bundle cashback (UOB S$2,500) minus fees.
3. Extend tenure slightly for lower payments, but watch retirement OA drawdown.[8]
4. Check hidden costs guide.
Disclaimer: This is educational; consult Homejourney brokers or advisors. Rates as of 2026; MAS regulates fairness.[1][2]
FAQ: How to Calculate If Refinancing is Worth It
How long for break-even on S$1M refinance?
Savings S$500/month, costs S$5k = 10 months. Use our calculator.
Refinancing HDB vs private?
HDB min S$200k, faster approval; private S$300k+, higher cashback potential.[4]
Current best rates?
3M SORA +0.70% promotional (UOB/DBS). Track on Homejourney.
Lock-in penalty?
1.5% first year; plan exits. Details in refinancing vs repricing.
Singpass for refinance?
Yes—see Singpass guide.
Ready for easy refinancing? Compare refinance rates on Homejourney today—one-click to savings. Link back to our pillar on home loans for full coverage.
