How to Calculate If Refinancing is Worth It: Homejourney Guide
To determine if refinancing your home loan is worth it, calculate the break-even point by dividing total refinancing costs by your monthly savings from the new lower rate. If you plan to stay in your property longer than this period and rates are favorable, refinancing often makes financial sense for Singapore homeowners.
This cluster article focuses on the precise calculations and real-world examples to assess refinancing value, building on our pillar guide to Singapore home loans. At Homejourney, we prioritize your financial safety by providing transparent tools like our refinancing calculator to verify savings before you switch mortgage banks.
Understanding Refinancing Basics in Singapore
Refinancing involves switching your entire home loan to a new bank for better rates or terms, unlike repricing which stays with the current bank. In Singapore, most loans peg to SORA (Singapore Overnight Rate Average), currently around 3% for 3M compounded SORA as of 2026[1][3]. Banks like DBS, OCBC, and UOB offer promotional packages starting from 1.35% fixed in Year 1[3].
Refinancing makes sense if you can secure a rate drop of at least 0.5%, covering costs like legal fees (S$2,000-S$3,000), valuation (S$500-S$1,500), and possible clawback penalties up to 1.5% if within lock-in[3]. Homejourney simplifies this by letting you compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, and more in one place at Homejourney bank rates.
Step-by-Step: How to Calculate If Refinancing is Worth It
Follow these actionable steps to crunch the numbers accurately. Use Homejourney's free refinancing calculator for instant results with Singpass integration for verified data.
- Gather Your Current Loan Details: Note your outstanding loan (e.g., S$800,000), current interest rate (e.g., 3.5%), monthly repayment (e.g., S$4,000), and remaining tenure (e.g., 25 years)[2].
- Find New Loan Offers: Check rates on Homejourney. Example: UOB offers 3M SORA + 0.70% (about 2.9%) for Year 1 on S$450k+ loans[1]. New monthly payment might drop to S$3,700, saving S$300/month[4].
- Estimate Total Costs: Legal fees S$2,500 + valuation S$800 + processing S$200 = S$3,500. Subtract cash rebates (e.g., UOB S$2,000 for S$450k loan[1]) = net cost S$1,500.
- Calculate Monthly Savings: New payment - old payment = S$300.
- Compute Break-Even Point: Net costs ÷ monthly savings = S$1,500 ÷ S$300 = 5 months. If staying beyond 5 months, it's worth it.
This method ensures you see real net savings. For HDB flats, factor CPF usage and ABSD remission rules from HDB guidelines.
Real Singapore Example: Is Refinancing Worth It?
Consider a Toa Payoh resale HDB owner with S$500,000 outstanding loan at 3.8% (S$2,600/month, 20 years left). They spot OCBC's 1.50% fixed Year 1 via Homejourney bank rates, dropping to S$2,350/month (S$250 savings)[3].
Costs: S$2,200 legal + S$500 valuation - S$2,000 rebate = net S$700. Break-even: S$700 ÷ S$250 = 2.8 months. Over 2 years, total savings exceed S$6,000, minus costs. Insider tip: Time it post-lock-in expiry (usually 2-3 years) to avoid penalties[3].
The chart below shows recent interest rate trends in Singapore:
As seen in the chart, SORA has stabilized around 2.8-3.2% in late 2025, making fixed-to-floating switches viable if promotions beat your current rate[1][3]. Track live rates on Homejourney for perfect timing.
Hidden Costs and How to Minimize Them
Beyond basics, watch for clawback (prepaid interest refund clawback, up to 3 months), discharge fees (S$300-S$500), and reconveyancing. Total hidden costs can hit S$5,000 for larger loans. Learn more in our Hidden Costs in Refinancing Mortgage: Step-by-Step Guide Homejourney ">Hidden Costs in Refinancing guide.
- Negotiate rebates: Banks like HSBC offer S$2,300+ for S$500k[3].
- Choose low-minimum packages: UOB from S$250k[1].
- Submit one application via Homejourney to get competing offers from multiple banks, maximizing rebates.
Always verify with MAS guidelines on total cost transparency. Homejourney verifies all rates daily for your trust.
When to Refinance: Timing and Eligibility
Best now if SORA dips or promotions beat your rate by 0.3%+. Avoid if within 2-year lock-in or selling soon (penalty waivers rarer on fixed[3]). Eligibility: Singaporean/PR, property value S$450k+, TDSR under 55% per MAS.
Refinancing steps: Check rates, apply via Singpass (1 application to all banks), get offers in 3-7 days, legal completion in 4-6 weeks. See our Step-by-Step Guide to Refinancing Your Mortgage in Singapore | Homejourney ">Step-by-Step Refinancing Guide for details.
Refinancing vs Repricing: Quick Comparison
| Aspect | Refinancing | Repricing |
|---|---|---|
| Bank Switch | Yes (e.g., DBS to UOB) | No |
| Rates | Better promotions (1.35%+)[3] | Limited to current bank |
| Costs | S$2k-S$5k net (with rebates) | S$1k-S$2k |
| Best For | >0.5% savings | Small tweaks |
Compare options in our Refinancing vs Repricing: Which is Better for Singapore Homeowners? Homejourney ">Refinancing vs Repricing article. Use Homejourney to switch mortgage banks seamlessly.
Maximize Savings with Homejourney
Submit one refinancing application on Homejourney bank-rates to DBS, OCBC, UOB, etc., and let banks compete. Track SORA live, calculate eligibility instantly, and connect with our mortgage brokers for personalized advice. Pair with property search at to find upgraders within budget.
Disclaimer: This is general advice; consult professionals for your situation. Rates fluctuate; verify on Homejourney as of 2026[1][2].
FAQ: How to Calculate If Refinancing is Worth It
1. What is the break-even formula for refinancing?
Net refinancing costs divided by monthly savings gives months to recover costs. Example: S$2,000 costs / S$200 savings = 10 months[4].
2. How much rebate can I get when refinancing in Singapore?
S$2,000-S$2,800 for S$450k-S$1.5m loans from banks like UOB and DBS[1][3]. Check Homejourney for latest.
3. Is refinancing worth it if rates drop 0.2%?
Usually no, unless high rebate covers costs. Calculate precisely with our tool.
4. Can HDB owners refinance?
Yes, post-MOP, subject to HDB rules and bank packages from S$250k[1].
5. How long does the refinance process take?
4-8 weeks; faster with Homejourney's multi-bank Singpass application.
Ready to see if refinancing saves you money? Use our refinancing calculator and apply today. For full home loan strategies, read our pillar guide on Singapore mortgages. Homejourney: Your trusted partner for safe, transparent property decisions.
