How to Calculate If Refinancing is Worth It: Homejourney Guide

To calculate if refinancing is worth it, compare your current monthly mortgage payment against the new one, subtract refinancing costs (like legal fees of S$2,000–S$4,000 and valuation fees), and divide the monthly savings by the total costs to find the break-even period—aim for under 24–30 months to justify the switch.

Homejourney prioritizes your financial safety by providing transparent tools like our refinance savings calculator, helping you verify savings before committing. This cluster article dives into the math behind how to calculate if refinancing is worth it, with Singapore-specific examples, while our pillar guide on Mortgage Refinancing Singapore 2026: Homejourney Ultimate Guide ">Mortgage Refinancing Singapore 2026 covers the full process.

Refinancing Fundamentals: Know Your Options

Refinancing involves switching your entire home loan to a new bank for better rates or terms, unlike repricing which stays with your current bank. In Singapore, refinancing suits you if seeking cash rebates (e.g., S$2,000 from UOB for loans over S$450,000) or lower rates from banks like DBS or OCBC[1][5]. Repricing is simpler with no legal fees but fewer incentives.

Check your lock-in period first—most are 2–3 years with 1.5% penalties for early exit. Use Homejourney's bank rates comparison to compare DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank rates in one place.

Step-by-Step: How to Calculate Refinancing Savings

Follow these actionable steps to determine if you'll save money refinancing and reduce mortgage payment:

Gather current loan details: Note outstanding balance (e.g., S$800,000), remaining tenure (25 years), current rate (e.g., 3M SORA + 1.00% = ~3.1% p.a.).
Find new rates: On Homejourney, track real-time SORA and compare packages—e.g., UOB's Year 1: 3M SORA + 0.70% (~2.8%)[1].
Calculate monthly payments: Use formula: Monthly Payment = [Loan Amount × Monthly Rate × (1 + Monthly Rate)^Tenure] / [(1 + Monthly Rate)^Tenure - 1]. For S$800,000 at 3.1% over 25 years: ~S$4,150. New at 2.8%: ~S$4,000. Savings: S$150/month.
Tally costs: Legal fees (S$2,000–S$3,000), valuation (S$500–S$1,500), possible clawback (1.5% of loan if in lock-in). Total: ~S$5,000. See details in our Hidden Costs of Refinancing Your Mortgage: What Homejourney Users Need to Know ">Hidden Costs of Refinancing.
Compute break-even: Break-even months = Total Costs / Monthly Savings = S$5,000 / S$150 = 33 months. If under 3 years and you plan to stay longer, proceed.

Try it instantly with Homejourney's refinance savings calculator—input your details for personalized results.

Understanding SORA and Current Rates

SORA (Singapore Overnight Rate Average), published by MAS, is the key benchmark for floating rates in Singapore. Most packages are 3M Compounded SORA + margin (e.g., OCBC Year 1: 1M SORA + 0.98% ~2.9%)[5]. Fixed rates start at ~1.50% for Year 1 from select banks[3].

The chart below shows recent interest rate trends in Singapore:

As seen, SORA has hovered around 2.8–3.1% in 2026, making lower interest rate refinancing viable if your current package exceeds 3.5%. Track live rates on Homejourney to time your move.

Real Singapore Example: HDB vs Private Property

For a S$600,000 HDB flat in Punggol (e.g., Treelodge@Punggol), current loan at DBS 3M SORA +1.20% (~3.3%), monthly ~S$2,900 over 25 years. Refinance to UOB promo: Year 1 3M SORA +0.70% (~2.8%), new monthly ~S$2,800. Savings: S$100/month.

Costs: S$3,000 legal + S$800 valuation + S$2,000 UOB rebate = net S$1,800 cost. Break-even: 18 months. For private condos like The Sail@Marina Bay (S$1.2M loan), rebates hit S$2,500, covering costs faster[1]. Always verify eligibility—HDB min S$200,000, private S$300,000[5].

Hidden Costs and Timing Tips to Cut Mortgage Costs

Beyond fees, factor penalties if within lock-in (waived on sale often)[3]. Best time: End of lock-in or when SORA dips. Negotiate via Homejourney—submit one application to all banks (DBS to Citibank) via Singpass for competing offers.

Legal fees: S$2,000–S$4,000 (subsidized often).
Valuation: S$500+.
Clawback: Up to 1.5%.
Tip: Choose 2-year lock-in for flexibility[3].

Read Refinancing vs Repricing: Which is Better for You? Homejourney ">Refinancing vs Repricing for more. Compare Best Bank Refinancing Rates Comparison 2026: Homejourney Guide ">Best Bank Rates 2026 on Homejourney.

Actionable Steps to Refinance Safely with Homejourney

Homejourney ensures trust with verified rates and multi-bank applications:

Visit Homejourney bank-rates, use Singpass for instant verification.
Calculate savings with our tool.
Submit one form—get offers from 10+ banks.
Track SORA live, apply for properties via property search.
Post-refi, maintain with Aircon Services ">aircon services.

Disclaimer: This is educational; consult professionals. Rates as of 2026 from bank sites[1][3][5].

FAQ: Common Refinancing Questions

How long for refinancing break-even?
Typically 12–36 months. Use Homejourney calculator for your numbers.

What's the min loan for refinancing?
HDB: S$200,000; Private: S$300,000[5].

Can I refinance during lock-in?
Yes, but pay 1.5% penalty unless waived.

Best banks for rebates 2026?
UOB S$2,000+, OCBC S$2,500+ for S$1M+[1][5]. Compare on Homejourney.

Does refinancing affect TDSR?
No, if payments decrease and tenure same.

Ready to cut mortgage costs? Start with Homejourney's refinance savings calculator today. For full details, see our pillar: Mortgage Refinancing Singapore 2026: Homejourney Ultimate Guide ">Mortgage Refinancing Ultimate Guide.