How to Calculate If Refinancing is Worth It: Homejourney Guide

To calculate if refinancing your home loan is worth it, compare your current monthly payment against the new one, subtract refinancing costs (like legal fees of S$2,000–S$3,000), and divide the monthly savings by the costs to find the break-even period—aim for under 24–36 months to justify the switch.

Homejourney makes this easy with our bank rates comparison tool, where you can compare refinance offers from DBS, OCBC, UOB, HSBC, Standard Chartered, and more without visiting branches.

What is Refinancing and When Does It Make Sense?

Refinancing means switching your existing home loan to a new lender for better rates or terms, unlike repricing which stays with your current bank. In Singapore, it's ideal when rates drop, like current 1M SORA + 0% offers at around 1.12% p.a. as of January 2026[3]. For HDB flats or private properties, check if you're past your lock-in period (typically 2–3 years) to avoid penalties of 1.5% of the loan amount[3].

Refinancing suits owners with loans over S$500,000 facing higher rates, potentially saving S$200–S$500 monthly. Always factor in Total Debt Servicing Ratio (TDSR) limits at 55% of income. This cluster focuses on calculations; for full details, see our pillar guide on Singapore home loans.

Step-by-Step: How to Calculate Refinancing Savings

Follow these steps to determine if refinancing pays off. Use Homejourney's mortgage calculator at https://www.homejourney.sg/bank-rates#calculator for instant results.

1. Gather current loan details: Note your outstanding principal, interest rate, tenure left, and monthly payment. Example: S$800,000 loan at 3% p.a., 25 years left, monthly payment S$3,800[1].
2. Find new offers: Compare rates on Homejourney from DBS (1.30% fixed Year 1), OCBC, UOB—lowest floating at 1M SORA + 0.25% (1.36%)[3]. New payment: ~S$3,400, saving S$400/month.
3. Estimate costs: Legal fees S$2,000–S$3,000, valuation S$500–S$1,000, possible clawback if within 3 years. New banks often rebate S$2,000–S$2,800 for loans over S$500k[3]. Net cost: S$500–S$1,500.
4. Calculate break-even: Monthly savings ÷ net costs = months to recover. S$400 savings / S$1,000 costs = 2.5 months.
5. Project total savings: Use formula: Savings = (Current rate - New rate) × Principal × Remaining years / 2 (approx.). Verify with DBS-style repayment calculator[1].

If break-even is under 2 years and you plan to stay 5+ years, refinance. Learn more in our related article: Refinancing vs Repricing: Which Saves You More Money in 2026? ">Refinancing vs Repricing: Which Saves You More in 2026?

Understanding SORA and Current Rate Trends

SORA (Singapore Overnight Rate Average) is the key benchmark for floating loans in Singapore, replacing older fixed rates for transparency per MAS guidelines. Most banks peg to 1M, 3M, or 6M SORA plus a margin.

The chart below shows recent interest rate trends in Singapore:

As seen, SORA has stabilized around 1.1–1.4% in early 2026, making now a good time for switches from legacy 3%+ loans[3]. Track live rates on Homejourney to time your move perfectly.

Real Singapore Example: HDB Flat Refinance Calculation

Consider a Toa Payoh HDB flat owner with S$400,000 outstanding loan at 2.8% fixed (monthly S$1,900, 20 years left). New offer from UOB: 3M SORA + 0.50% (~1.60%), monthly S$1,650—saving S$250.

Costs: Legal S$2,200 (rebated S$2,000 by bank), valuation S$600, net S$800. Break-even: 800 / 250 = 3.2 months. Total 5-year savings: S$15,000 interest. For private condos like those in Orchard, scale up for larger loans—use our bank-rates page to compare.

Insider tip: HDB loans cap at MSR 30%, but banks offer flexibility if TDSR-compliant. Always verify via HDB portal.

Hidden Costs and How to Minimize Them

Beyond basics, watch for processing fees (S$200–S$500) and discharge fees from old bank (up to 1.5% if locked-in). Homejourney's digital refinancing skips branch visits—apply online via Singpass for one-click multi-bank submission to DBS, HSBC, etc.

• Negotiate rebates: Loans >S$1M get S$2,500+ cashback[3].
• Time post-lock-in: Avoid penalties.
• No branch visit refinance: Homejourney handles digitally.

Read our guide: Hidden Refinance Costs Without Bank Visits: Homejourney Guide ">Hidden Refinance Costs Without Bank Visits.

Actionable Steps to Refinance via Homejourney

1. Visit https://www.homejourney.sg/bank-rates and compare refinance offers.
2. Use our calculator to simulate savings.
3. Apply once—get offers from 10+ banks (Maybank, CIMB, RHB included).
4. Sign digitally with Singpass; track SORA in real-time.
5. Connect with Homejourney mortgage brokers for free advice.

Disclaimer: This is general info; consult professionals. Rates as of Jan 2026[3]; subject to bank approval and TDSR/MSR.

Frequently Asked Questions (FAQ)

How long does refinancing take in Singapore?
S$ 4–6 weeks from application to completion, faster with Homejourney's Singpass integration. See Step-by-Step Singpass Loan Application Guide | Homejourney ">Step-by-Step Singpass Guide.

Is refinancing worth it for small savings?
Only if break-even <24 months and net rebate covers costs. Use our tool at mortgage calculator.

Can I refinance HDB loans online?
Yes, via banks on Homejourney—no branch visits. Compare HDB vs bank options first.

What if rates rise after refinancing?
Choose packages with free conversion (FC12/24) after lock-in[3].

How to compare refinance offers easily?
Homejourney lists DBS, OCBC, UOB side-by-side. Guide: How to Use Homejourney Bank Rate Comparison: Step-by-Step Guide ">How to Use Bank Rate Comparison.

Ready to calculate if refinancing is worth it? Start with Homejourney's safe, trusted platform at https://www.homejourney.sg/bank-rates. Link back to our pillar: Singapore Home Loans Complete Guide for more.

References

1. Singapore Property Market Analysis 3 (2026)
2. Singapore Property Market Analysis 1 (2026)