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, typically saving S$200+ per month on loans over S$500,000 at current 2026 rates.

At Homejourney, we prioritize your financial safety by providing transparent tools to verify if switching banks like DBS, OCBC, or UOB delivers real value. This cluster article dives into precise calculations, linking back to our pillar guide on Singapore Mortgage Refinancing Essentials for full coverage.

What is Mortgage Refinancing in Singapore?

Refinancing means taking a new loan from another bank (e.g., from DBS to UOB) to pay off your existing mortgage, often securing lower rates or cash rebates. Unlike repricing with your current bank, refinancing accesses best bank refinance Singapore offers from competitors.

For HDB flats or private condos like those in Punggol or Orchard, eligibility requires at least 2 years from your original loan disbursement or lock-in expiry. Homejourney simplifies this with real-time refinancing rates comparison across DBS, OCBC, UOB, HSBC, and more at https://www.homejourney.sg/bank-rates.

Current SORA-based rates hover around 3M SORA + 0.70% for Year 1 promotions, per UOB offers[1]. Always check Homejourney for updates, as rates fluctuate with MAS guidelines.

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

Follow these actionable steps to determine savings. Use Homejourney's refinancing calculator at https://www.homejourney.sg/bank-rates#calculator for instant results with Singpass integration.

Gather Current Loan Details: Note outstanding balance (e.g., S$800,000), interest rate (e.g., 3.5%), remaining tenure (e.g., 25 years), and monthly payment (e.g., S$4,000).
Find New Offers: Compare top banks refinancing on Homejourney. Example: UOB offers 3M SORA + 0.70% (est. 2.8%) for Year 1 on S$450k+ loans[1].
Calculate Monthly Savings: New payment = Loan amount × [rate/12 × (1+rate/12)^tenure] / [(1+rate/12)^tenure - 1]. Savings = Old payment - New payment (e.g., S$250/month).
Tally Costs: Legal fees (S$2,000-S$3,000), valuation (S$500-S$1,500), clawback (1.5% if early), processing (S$200). Total: ~S$5,000.
Compute Break-Even: Break-even months = Total costs / Monthly savings (e.g., S$5,000 / S$250 = 20 months).
Project Total Savings: If break-even < remaining lock-in or 3 years, proceed. Factor rebates (UOB: S$2,000 for S$450k+)[1].

If break-even exceeds your timeline (e.g., planning to sell soon), skip it. Homejourney verifies all data for trusted decisions.

Real Singapore Example: Is Refinancing Worth It?

Consider a S$1M condo loan in Bedok, outstanding S$800,000 at 3.8% (S$4,200/month, 22 years left). New UOB DBS OCBC UOB refinance at 2.9% drops payment to S$3,900 (S$300 savings/month).

Costs: S$2,500 legal + S$800 valuation + S$2,000 rebate = Net S$1,300 cost. Break-even: 4.3 months. Over 5 years, save S$16,000+ interest. Check Best Banks for Mortgage Refinancing Singapore 2026 | Homejourney ">Best Banks for Mortgage Refinancing Singapore 2026 for latest refinance offers.

Pro tip: For HDB in Yishun, factor CPF refunds—Homejourney's tools auto-calculate this securely via Singpass.

Understanding SORA and Current Rate Trends

SORA (Singapore Overnight Rate Average) is the MAS benchmark for floating loans, replacing fixed rates amid 2026 volatility. Most best bank refinance Singapore packages start at 3M SORA + 0.70% p.a.[1].

The chart below shows recent interest rate trends in Singapore:

As seen, rates dipped 0.2% in Q1 2026, favoring refinancing now. Track live on Homejourney to time your move perfectly.

Hidden Costs and How to Minimize Them

Beyond basics, watch clawback penalties (up to 1.5% if breaking lock-in) and processing fees. Banks offset with rebates: UOB S$2,500 for S$1M+[1]. Net gain often S$1,000+.

Legal: Negotiate via Homejourney brokers (often subsidized).
Valuation: Free for high-value loans at top banks.
Tip: Submit one app on Homejourney—get competing offers from DBS, OCBC, UOB without fees.

Read our Hidden Costs of Best Banks for Mortgage Refinancing You Need to Know | Homejourn... ">Hidden Costs of Best Banks for Mortgage Refinancing for details. Disclaimer: Rates change; consult professionals. Homejourney ensures transparency, not financial advice.

When to Refinance: Timing Tips for 2026

Refinance post-lock-in (2-3 years typical) when SORA drops 0.5%+. Avoid if selling within 18 months. Use Homejourney's multi-bank submission: One form, multiple refinancing rates comparison from HSBC to Maybank.

Combine with goals like renovation—link to Aircon Services ">aircon services post-refi for home upgrades.

FAQ: How to Calculate If Refinancing is Worth It

Q: What's the break-even formula for refinancing?
A: Total costs ÷ Monthly savings = Months to recover. Under 24 months? Worth it for most.

Q: Which banks have the best refinance offers in 2026?
A: Compare top banks refinancing like DBS (fixed 1.78% Y1[3]), UOB (SORA+0.70%[1]), OCBC on Homejourney's bank-rates.

Q: Refinancing vs repricing—which saves more?
A: Refinancing often wins with rebates. See Refinancing vs Repricing: Which is Better for You? Homejourney ">Refinancing vs Repricing.

Q: Can I refinance my HDB loan?
A: Yes, after minimum occupancy period. Use Homejourney calculator for CPF-inclusive math.

Q: How long does refinancing take?
A: 3-6 weeks. Speed up with Homejourney's Singpass app—track status securely.

Ready to check if how to calculate if refinancing is worth it for you? Start with Homejourney's free tools at https://www.homejourney.sg/bank-rates. Compare rates, calculate savings, and apply once—let banks compete. For full strategies, return to our pillar guide. Your trusted partner in safe property decisions.