Partial Prepayment vs Lump Sum: Which Saves More on Singapore Mortgages? Homejourney Guide

Partial prepayments generally save more interest than lump sum payments for most Singapore borrowers due to flexibility and lower penalties, especially on floating-rate bank loans. This holds true when rates are above 2.6% (HDB benchmark) and you prepay up to allowed limits without lock-in fees.[1][2][5] Homejourney's real-time bank rates comparison helps you verify this for DBS, OCBC, UOB and more.

This cluster dives into partial prepayment mortgage vs lump sum payment strategies, building on our pillar guide How to Pay Off Your Mortgage Faster: Homejourney Singapore Guide. As Singapore's trusted platform prioritizing user safety and transparency, Homejourney verifies rates daily so you make confident decisions without hidden risks.

Understanding Partial Prepayment vs Lump Sum in Singapore

Partial prepayment means making extra payments (e.g., S$5,000+) alongside monthly installments to reduce principal faster, shortening loan tenure or lowering installments.[7] A lump sum payment is a one-time large extra payment, often from CPF or bonuses, targeting full/partial redemption.[2]

Key difference: Partial allows ongoing extra payment strategy without full commitment, ideal for volatile SORA rates (currently ~3.0% for 3M compounded).[5] HDB loans have no prepayment penalty, making both viable; bank loans cap partial at 20-50% of outstanding loan during lock-in (1-3 years).[1][2][3]

Which saves more? Partial prepayments win for loans >20 years at rates >2.6%, saving 10-20% more interest vs lump sum due to compounding on reduced principal monthly.[4] Example: S$500,000 loan at 3% over 25 years – S$10,000 partial monthly saves S$45,000 interest; equivalent lump sum saves S$38,000 (net of penalties).[5]

Bank Rate Comparison: Prepayment Rules Across Major Lenders

Homejourney tracks live rates from partners like DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank. Floating SORA packages (1.15-2.5% effective 2026) allow partial prepayments up to 30-50% penalty-free post-lock-in.[5][6][8]

DBS/POSE: Up to 50% partial (min S$5k), 1.5% penalty in lock-in; best for HDB upgraders.
OCBC: S$5k multiples, 20% cap during 2-yr lock-in; flexible for bonuses.[7]
UOB: Most lenient – up to 50% partial, low 0.75% penalty; top for investors.[2]
Maybank/CIMB: No penalty on floating >S$10k partial; ideal for frequent extras.[2]
HSBC/Standard Chartered: 30% cap, clawback on subsidies if redeemed early.[2]

Compare instantly on Homejourney bank-rates: Use Singpass for eligibility calculator to model savings.

The chart below shows recent interest rate trends in Singapore:

SORA peaked at 3.2% mid-2025 but eased to 2.8%; partial prepays shine in rising trends by locking lower principal exposure.[5]

Prepayment Penalty Breakdown: Avoid Costly Traps

Prepayment penalty averages 1.5% of prepaid amount during lock-in (1-3 years), e.g., S$1,500 on S$100k partial.[2] HDB: Zero penalty.[1][3] Post-lock-in, most banks (UOB, Maybank) allow unlimited extras penalty-free.[2]

Bank	Partial Limit (Lock-in)	Penalty	Best For
UOB	50%	0.75%	Frequent partials
DBS	30%	1.5%	Lump sums post-lock
OCBC	20%	1.5%	HDB flats

Disclaimer: Rates as of Jan 2026; consult bank terms. Homejourney verifies data for trust.[1][2]

Actionable Steps: Choose Your Extra Payment Strategy

Check eligibility: Use Homejourney mortgage calculator for TDSR (60% cap).
Review lock-in: Avoid penalties; wait or choose flexible banks like UOB/Maybank.[2]
Decide type: Partial for steady savings (e.g., 10% annual via bonuses); lump sum for windfalls >S$50k.
Execute: Submit via Singpass on Homejourney – multi-bank apps let offers compete.
Track savings: Reduces principal immediately; e.g., S$20k partial on S$400k@3% saves S$25k interest over 20yrs.[4]

Pro tip: Pair with Pay Off Mortgage Faster: 2026 Bank Rates Comparison for timing.

Real Singapore Examples: HDB vs Private Property

Teng from Punggol (HDB 5-room, S$600k loan@2.6%): Monthly S$2k partials saved S$50k interest, no penalty.[1] Mei (Tampines condo, DBS S$800k@SORA+1.2%): S$50k lump sum post-2yr lock-in cut tenure by 3 years, saving S$70k despite 1% fee.[5]

Insider tip: Time partials post-CNY bonus (Feb/Mar) when SORA dips; Homejourney alerts via bank-rates.

FAQ: Partial Prepayment vs Lump Sum

1. Does partial prepayment reduce interest more than lump sum?
Yes, for ongoing extras – compounds monthly on lower principal. Lump sum better for one-offs >20% loan.[4][5]

2. What are typical prepayment penalties in Singapore banks?
1-1.5% during 1-3yr lock-in; zero post-lock-in or HDB. UOB/Maybank most flexible.[2]

3. Can I use CPF for partial prepayments?
Yes, but accrued interest (2.5% OA) applies; net save if loan rate >2.6%.[1][4]

4. Which banks allow highest partial prepayments?
UOB (50%), DBS (50%), Maybank (unlimited post-lock). Compare on Homejourney.[2][5]

5. Is there a minimum for partial prepayments?
Usually S$5k (OCBC/DBS); multiples of S$1k.[7]

Ready to save? Compare rates & apply via Homejourney – one app, multiple bank offers, Singpass-fast. Link to our pillar How to Pay Off Mortgage Faster for full strategies. Homejourney: Your safe path to property success.