How to Calculate If Refinancing is Worth It: Homejourney Guide

Refinancing is worth it if your monthly savings exceed the costs within 24-36 months, typically saving S$200-500 monthly on loans over S$500,000 when rates drop by 0.5% or more.

Homejourney makes this calculation easy with our refinancing calculator at https://www.homejourney.sg/bank-rates#calculator, helping you compare rates from DBS, OCBC, UOB, HSBC, and more in a safe, trusted environment.

What is Mortgage Refinancing in Singapore?

Refinancing means switching your home loan to a new bank or package for better rates or terms, unlike repricing which stays with the same bank. It's ideal when SORA rates fall or promotions offer cash rebates like UOB's S$2,000 for loans over S$450,000[1].

For HDB or private property owners, refinancing can lower payments under TDSR rules from MAS. This cluster focuses on calculations; see our pillar guide on Singapore Mortgage Essentials for full coverage.

Homejourney verifies all rates daily, prioritizing your safety with transparent comparisons. Start at https://www.homejourney.sg/bank-rates.

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

To determine if refinancing pays off, compute the break-even point: total costs divided by monthly savings.

Gather current loan details: Note your outstanding principal, interest rate (e.g., 3M SORA + 0.80%), monthly payment, and remaining tenure. Use DBS repayment calculator for precision[2].
Find new rates: Compare on Homejourney—e.g., UOB's Year 1: 3M SORA + 0.70%[1]. Current top rates start at 1.35% fixed for select banks[3].
Calculate new payment: For a S$800,000 loan at 25 years, dropping from 3.5% to 2.8% saves ~S$250/month.
Add costs: Legal fees (S$1,500-2,500), valuation (S$500-1,000), possible clawback (1-1.5% if in lock-in). New banks often rebate these plus cash (e.g., S$2,300)[3].
Break-even: If net cost is S$2,000 and savings S$250/month, break-even is 8 months (S$2,000 / S$250).

Refinance if break-even < remaining tenure and < 2-3 years. Homejourney's tool automates this—submit one application via Singpass to DBS, OCBC, UOB simultaneously.

Understanding SORA and Current Rates

SORA (Singapore Overnight Rate Average) is the MAS benchmark for floating loans, now at ~2.8% for 3M compounded. Fixed rates offer stability, e.g., 1.50% Year 1 from top packages[3].

The chart below shows recent interest rate trends in Singapore:

As seen, rates dipped in late 2025, making 2026 ideal for refinancing if your rate exceeds 3.2%. Track live SORA on Homejourney.

Real Singapore Example: Is Refinancing Worth It?

Consider an HDB owner in Tampines with S$600,000 outstanding at 3.8% fixed (monthly: S$3,200, 20 years left). New UOB package: 3M SORA + 0.70% (~2.5%, monthly: S$2,900). Savings: S$300/month.

Costs: S$2,000 legal/valuation, offset by S$2,000 rebate. Net cost: S$0. Break-even: immediate. Total savings: S$72,000 over tenure.

For private condo in Orchard, S$1.2M loan from 4% to 1.78% fixed[3]: Saves S$600/month post S$2,500 net rebate. Insider tip: Time before lock-in ends (2-3 years standard) to avoid penalties[1].

Use Homejourney's multi-bank submission: One form, multiple offers. Link to details in Best Bank Refinancing Rates Comparison 2026: Homejourney ">Best Bank Rates 2026.

Hidden Costs and How to Minimize Them

Beyond basics: Clawback if early exit, processing fees (S$200-500). Total: S$3,000-5,000 without rebates. Banks like DBS offer S$2,800 for S$1.5M+ loans[3].

Minimize by: Choosing no-clawback packages, negotiating via Homejourney brokers. See Hidden Costs in Refinancing Mortgage Guide: Homejourney ">Hidden Costs Guide.

Refinancing Steps and Timeline

Refinancing steps:

Check eligibility (LTV <75% for >10 years ownership, TDSR <55%).
Compare on Homejourney bank-rates.
Apply via Singpass—auto-verified.
Bank approves (2-4 weeks), valuation/legal (1-2 weeks).
Disburse new loan, old bank redeemed (1 week).

Total: 4-8 weeks. Best pre-SORA hikes. Read Step-by-Step Guide to Refinancing Your Mortgage in Singapore | Homejourney ">Step-by-Step Guide.

When NOT to Refinance

Avoid if <12 months to natural repricing, high LTV risking penalties, or rates rising (check Homejourney SORA tracker). Always consult pros—Homejourney connects you safely.

Disclaimer: Not financial advice; rates change. Verify with MAS/HDB guidelines.

FAQ: How to Calculate If Refinancing is Worth It

Q: What's the formula for break-even?
A: (Total refinancing costs - rebates) / Monthly savings = months to break even. Aim under 24 months.

Q: Current best refinancing rates?
A: From 1.35% fixed Year 1 (min S$500k)[3]. Compare live on Homejourney.

Q: Refinancing vs repricing?
A: Reprice same bank (no fees), refinance for rebates/better rates. Details in Refinancing vs Repricing: Which is Better for You? Homejourney ">Refinancing vs Repricing.

Q: HDB refinancing rules?
A: Same as private but check HDB min occupation period. Use our calculator.

Q: How to switch mortgage bank fast?
A: Homejourney's one-click multi-bank app via Singpass—offers in days.

Ready to save? Calculate now at Homejourney refinancing calculator and apply securely. Trust Homejourney for verified rates and user-first service—find your next property at property search.