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, refinancing typically saves money—use Homejourney's refinance calculator at https://www.homejourney.sg/bank-rates#calculator for instant results.[1][2][4]

This cluster article focuses on precise calculations for Singapore homeowners, linking back to our pillar guide on Singapore Home Loans: The Complete Homejourney Guide. Homejourney prioritizes your safety with verified bank rates from DBS, OCBC, UOB, and more, ensuring transparent decisions in a trusted environment.

What is Refinancing and When Does It Make Sense?

Refinancing means switching your existing home loan to a new one from another bank (or sometimes the same) for better terms, unlike repricing which stays with the current bank. It's worth it when new rates like 3M SORA + 0.70% p.a. (around 1.8% effective in 2026) beat your current rate by at least 0.5%, covering costs within 2-3 years.[1][3]

In Singapore, with SORA as the key benchmark since 2024 (replacing SOR/FIX), floating rates from banks like UOB offer Year 1 at 3M Compounded SORA + 0.70%. Fixed rates start at 1.35%-1.78% for 2-3 years.[1][3] Check Refinancing vs Repricing: Which is Better for You? Homejourney Guide ">Refinancing vs Repricing: Which is Better? for details.

Homejourney lets you compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank in one place at https://www.homejourney.sg/bank-rates.

Key Refinancing Costs in Singapore

Refinancing costs include legal fees (S$1,500-S$3,000), valuation fees (S$500-S$1,500), bank processing (S$200-S$500), and possible clawback penalties if within lock-in (1.5% of loan).[3] New banks often rebate these via cash payouts: UOB offers S$2,000 for S$450k+ loans, up to S$2,500 for S$1M+.[1]

Net cost could be zero or negative with rebates. Factor in HDB resale levy if applicable, or private property stamp duties. Always verify with MAS guidelines on home loans.

Step-by-Step: How to Calculate Break-Even Point

Current Monthly Payment: Use your loan statement. Example: S$1M loan, 25 years left, 3% rate = ~S$4,750/month.[2]
New Monthly Payment: Input new rate into a calculator. At 2% rate: ~S$4,300/month. Savings: S$450/month.
Total Costs: Legal S$2,000 + Valuation S$800 + Processing S$300 - Rebate S$2,000 = S$1,100 net.
Break-Even Months: Costs ÷ Savings = S$1,100 ÷ S$450 = 2.4 months.
Compare Tenure: If >3 years left, refinance. Use Homejourney's tool for precision.

This method uses standard formulas from DBS and Citibank calculators.[2][4] For HDB flats, check CPF usage via HDB portal.

Understanding SORA and Current Rates

SORA (Singapore Overnight Rate Average) is the volume-based benchmark for most Singapore home loans, with 3M Compounded SORA around 2.9% in early 2026. Banks add margins: UOB Year 1: +0.70% (effective ~3.6%), dropping to +1.00% later.[1]

The chart below shows recent interest rate trends in Singapore:

As seen, SORA has stabilized post-2024 hikes. Track live rates on Homejourney to time your move.

Real Singapore Example: Is Refinancing Worth It?

Meet Mr. Tan, owner of a S$1.2M condo in Punggol. Current DBS loan: S$900k outstanding, 2.8% rate, S$4,200/month. New UOB offer: 3M SORA +0.70% (~2.1% effective Year 1), S$3,900/month. Savings: S$300/month.

Costs: S$2,200 net after S$2,000 rebate. Break-even: 7 months. With 20 years left, he saves S$72,000 over tenure. Insider tip: Apply during low SORA periods like Q1 2026 for best margins.[1][3]

Run your numbers on Homejourney—submit one application via Singpass to all banks and let them compete.

Timing and Strategies for Maximum Savings

Refinance 6-12 months before lock-in ends to avoid penalties.
Negotiate: Mention competitor offers (e.g., OCBC 1.35% fixed) for better rebates.[3]
Combine with goals: Extra cash for renovations? Link to Aircon Services ">Homejourney aircon services post-refi.
Multi-bank apps via Homejourney save time—no branch visits.

Disclaimer: This is general advice; consult professionals. Rates fluctuate per MAS rules; Homejourney verifies data for trust.

FAQ: Common Questions on Refinancing Worth It

How long to break even on refinancing costs?
Typically 6-24 months. Divide net costs (after rebates) by monthly savings.[4][8]

Should I refinance my HDB loan?
Yes if savings exceed costs and TDSR allows. Use HDB's budget calculator alongside Homejourney's.[10]

What if rates rise post-refinance?
Choose packages with free conversion after 24 months, like UOB's.[1]

Is refinancing worth it for small savings?
No, if break-even > remaining tenure. Always calculate first on Homejourney.

How to start?
Compare at https://www.homejourney.sg/bank-rates, apply via Singpass.

Ready to see if refinancing is worth it? Use Homejourney's refinance calculator and multi-bank application today for safe, verified savings. Explore properties at https://www.homejourney.sg/search or our pillar guide for full home loan mastery.