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 (like legal fees and valuation) 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 pays off—use Homejourney's tools for precise calculations.

This cluster article dives deep into the math behind refinancing decisions, helping Singapore homeowners make informed choices. It builds on our pillar guide to Singapore home loans by focusing on tactical steps for how to calculate if refinancing is worth it. At Homejourney, we prioritize your safety and trust with transparent tools like our bank rates comparison at https://www.homejourney.sg/bank-rates.

Refinancing Fundamentals in Singapore

Refinancing means switching your entire home loan to a new bank or package for better rates or terms, unlike repricing which stays with the same bank. In 2026, with SORA rates fluctuating, refinancing can save thousands if your current rate exceeds market offers from DBS, OCBC, or UOB[1]. For HDB flats or private properties, check lock-in periods—most packages have 2-3 year locks with penalties of 1.5% for early exit[1].

Understand SORA (Singapore Overnight Rate Average), the key benchmark replacing SOR. Current top rates start at 1.09% for loans over $500k, with fixed options at 1.35-1.78% for years 1-3[1]. Homejourney lets you compare refinance offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more without branch visits.

The chart below shows recent interest rate trends in Singapore:

As seen in the chart, if 3M SORA + 0.50% beats your current rate, it's time to evaluate. Read our related article: Refinancing vs Repricing: Which is Better for Singapore Homes? | Homejourney ">Refinancing vs Repricing: Which is Better for Singapore Homes? | Homejourney.

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

Follow these actionable steps to crunch the numbers accurately.

Gather your current loan details: Note monthly payment, interest rate, remaining tenure, and outstanding balance. Example: $800,000 loan at 3% over 25 years = ~$4,000/month[2].
Find new rates: Use Homejourney at https://www.homejourney.sg/bank-rates to compare refinance offers. Say UOB offers 1.50% fixed for 3 years[1]. New payment: ~$3,400/month, saving $600/month.
Estimate costs: Legal fees (~$2,000-3,000), valuation (~$500-1,000), possible clawback. New banks often rebate $2,000-2,800 for $500k+ loans[1]. Net cost: $1,000.
Calculate break-even: Net costs ÷ monthly savings = months to recover. $1,000 ÷ $600 = 1.7 months. If staying longer, it's worth it.
Factor total savings: Over 2 years, $600 x 24 = $14,400 saved minus costs = $13,400 net gain.

Test this with Homejourney's calculator at https://www.homejourney.sg/bank-rates#calculator. For real example: A $1M HDB loan in Tampines at 3.2% refinanced to DBS 1.6% saved $800/month, breaking even in 2 months after $1,600 rebate[1].

Hidden Costs and Cash Rebates in Refinancing

Don't overlook fees: Processing ($200-500), discharge (~$500), and 1.5% penalty if in lock-in. But banks like OCBC and HSBC offer subsidies covering these, plus extras—$2,300 for $500k loans[1]. Insider tip: Loans over $1M get $2,500-2,800 rebates, making digital refinancing net positive.

At Homejourney, refinance online with no branch visit refinance via Singpass. Submit one application to all partners—receive competing offers. See: Refinance Your Home Loan Without Visiting Multiple Banks | Homejourney ">Refinance Your Home Loan Without Visiting Multiple Banks | Homejourney.

Projections: With SORA at ~1.1%[1], a $1.2M condo owner saves $15,000/year switching to Maybank's 1M SORA +0.25% package.

Timing Your Refinance: Lock-Ins and Rate Environment

Refinance near lock-in end to avoid penalties. Most have 2-year locks with free conversion options (FC12/24)[1]. Monitor SORA via Homejourney—refinance when rates dip below your current by 0.5%+.

Best for HDB upgraders or resale buyers in areas like Bedok or Punggol. MAS rules cap LTV at 75% for second loans, TDSR at 55%[2]. If selling soon, pick floating with sale waivers.

Money-Saving Strategies with Homejourney

Negotiate via multi-bank apps: Homejourney's one-click submission pits DBS vs UOB—Benefits of Multi-Bank Application in One Click | Homejourney ">Benefits of Multi-Bank Application in One Click | Homejourney.
Leverage Singpass: Instant verification speeds approval—Step-by-Step Singpass Loan Application Guide | Homejourney ">Step-by-Step Singpass Loan Application Guide | Homejourney.
Track rates: Use our real-time SORA tools and How to Use Homejourney Bank Rate Comparison: 2026 Guide ">How to Use Homejourney Bank Rate Comparison: 2026 Guide.
Easy mortgage switch: No paperwork hassle, connect with our brokers.

Disclaimer: This is general advice; consult professionals for personalized guidance. Homejourney verifies data for your safety.

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 equals months to break even. Example: $1,500 costs / $500 savings = 3 months[3].

2. Are cash rebates real for 2026 refinances?
Yes, $2,000+ from banks like Standard Chartered for $500k+ loans, often exceeding fees[1].

3. Can I refinance HDB loans online?
Absolutely—use Homejourney for digital refinancing with Singpass, no branches needed.

4. When is refinancing not worth it?
If break-even exceeds your stay (e.g., 24+ months) or rates rise soon[6].

5. How does Homejourney make it easy?
Compare rates, calculate savings, apply to multiple banks instantly at https://www.homejourney.sg/bank-rates.

Ready to see if refinancing saves you money? Start with Homejourney's calculator and compare refinance offers today. For full home loan strategies, check our pillar: Singapore Home Loans Guide. Your trusted partner for safe property decisions.