Calculating if Refinancing is Worth It: Complete Guide for Singapore Property Owners

Refinancing your home loan can save you thousands of dollars, but only if the numbers work in your favor. This comprehensive guide walks you through every calculation, hidden cost, and strategic decision you need to make before switching banks. Whether you're a first-time refinancer or exploring your options, Homejourney's definitive guide ensures you make an informed decision that protects your financial interests.

At Homejourney, we believe every property owner deserves transparent, trustworthy guidance when making major financial decisions. This guide combines real Singapore market data, practical calculations, and expert insights to help you determine whether refinancing is truly worth it for your situation.

Table of Contents

• Executive Summary: Is Refinancing Worth It?
• Understanding Refinancing vs Repricing
• The Break-Even Analysis: Your Most Important Calculation
• Complete Cost Breakdown: What You'll Actually Pay
• Reading the Interest Rate Environment
• Timing Your Refinance: Lock-In Periods and Market Conditions
• Step-by-Step Refinancing Process
• Money-Saving Strategies and Negotiation Tips
• How Homejourney Simplifies Refinancing Decisions
• Frequently Asked Questions
• Your Next Steps to Refinancing Success

Executive Summary: Is Refinancing Worth It?

The simple answer: refinancing is worth it if your break-even point is less than your remaining loan tenure. Most Singapore homeowners can save between S$20,000 to S$80,000 over the life of their loan by refinancing at the right time, but only if they understand the true costs involved.

Here's what you need to know upfront: Refinancing involves switching your home loan from your current bank to a new bank offering better rates. Unlike repricing (changing your package within the same bank), refinancing incurs upfront costs including legal fees, valuation fees, and potential redemption penalties. However, these costs are often offset by cash rebates from competing banks hungry for your business.

The key question isn't whether refinancing is possible—it's whether the interest savings justify the switching costs. This guide provides the exact calculations and frameworks to answer that question for your specific situation.

Understanding Refinancing vs Repricing: Know Your Options

What is Refinancing?

Refinancing means transferring your home loan from your current bank to a different bank. You're essentially taking out a new loan with the new bank to pay off your existing loan completely. This gives you access to different interest rates, loan structures, and promotional offers across Singapore's entire banking landscape.

When you refinance, you'll need to:

• Obtain a fresh property valuation
• Pay legal fees to process the redemption and new mortgage documentation
• Potentially pay a redemption penalty if you're within your lock-in period
• Receive a cash rebate from the new bank (typically S$2,000 to S$2,800 for loans above S$500,000)

What is Repricing?

Repricing means changing your home loan package within the same bank. You're not moving your loan; you're simply negotiating a new interest rate or loan structure with your current lender. This is faster, cheaper, and involves no legal fees or valuation costs.

However, repricing has limitations:

• Your current bank knows you're unlikely to leave, so they may offer less competitive rates
• You have less negotiating power than a new bank trying to win your business
• You miss out on cash rebates and promotional offers available to new customers

Refinancing vs Repricing: Which Should You Choose?

Use this framework to decide:

The Break-Even Analysis: Your Most Important Calculation

The break-even analysis is the single most important calculation in your refinancing decision. It tells you exactly how many months it will take for your interest savings to exceed your switching costs. If you plan to stay in your property longer than your break-even point, refinancing makes financial sense.

The Break-Even Formula

Here's the exact calculation:

Break-Even Months = Total Refinancing Costs ÷ Monthly Interest Savings

Let's work through a real Singapore example:

Your Situation:

• Current loan: S$500,000
• Current interest rate: 3.25% per annum
• Remaining tenure: 20 years (240 months)
• New bank's rate: 2.95% per annum

Step 1: Calculate Your Monthly Interest Savings

Current monthly interest on S$500,000 at 3.25%: S$1,354
New monthly interest on S$500,000 at 2.95%: S$1,229
Monthly savings: S$125

Step 2: Calculate Total Refinancing Costs

• Legal fees: S$800
• Valuation fee: S$400
• Redemption penalty (if within lock-in): S$7,500 (1.5% of S$500,000)
• Total costs: S$8,700
• Less cash rebate from new bank: -S$2,300
• Net costs: S$6,400

Step 3: Calculate Break-Even Point

S$6,400 ÷ S$125 = 51.2 months (approximately 4.3 years)

Verdict: Since your remaining tenure is 20 years and your break-even point is 4.3 years, refinancing is worth it. You'll continue saving money for the remaining 15.7 years.

When Break-Even Analysis Says No to Refinancing

Consider NOT refinancing if:

• Your break-even point exceeds your remaining loan tenure (you won't recoup costs)
• Your break-even point is longer than 7-8 years (too risky given life changes like relocation or property sale)
• You're planning to sell within 3-5 years (insufficient time to recover costs)
• The rate difference is less than 0.25% (savings too small to justify switching costs)

This is where Homejourney's refinancing calculator becomes invaluable. Rather than doing these calculations manually, you can input your loan details and instantly see your break-even point, total savings, and monthly payment reduction. Bank Rates ">Access Homejourney's refinancing calculator to run your personalized analysis in seconds.

Complete Cost Breakdown: What You'll Actually Pay

Most Singapore homeowners underestimate refinancing costs because they focus only on legal fees and miss the hidden expenses. Here's every cost you need to factor into your calculation:

Direct Costs You'll Pay

1. Legal Fees: S$600-S$1,200

Your lawyer handles the redemption notice to your current bank, prepares the new mortgage documentation, and conducts the property search. Most banks now offer legal fee waivers or subsidies for refinancing customers, so you may pay nothing or receive a rebate.

2. Valuation Fee: S$300-S$600

The new bank requires a fresh property valuation to assess their lending risk. This is a one-time cost that's often waived or subsidized by competing banks. Many banks now offer free valuations for refinancing customers with loans above S$500,000.

3. Redemption Penalty: 0% to 1.5% of loan amount

This is the most significant hidden cost. If you're refinancing within your lock-in period (typically 2-3 years), your current bank charges a redemption penalty. Here's how it works:

• Most banks charge 1.5% of the outstanding loan amount as a penalty
• Some banks offer reduced penalties (0.75%) after the first year
• A few banks waive penalties if you're selling the property

For a S$500,000 loan within lock-in: 1.5% × S$500,000 = S$7,500 penalty

4. Stamp Duty: Typically S$0 (usually waived)

While refinancing technically involves a new mortgage, most banks and the Inland Revenue Authority of Singapore (IRAS) treat refinancing as a continuation of the original mortgage. Stamp duty is typically waived, but confirm this with your lawyer.

Costs That Are Often Covered (or Reversed)

Cash Rebates from New Banks

Here's where refinancing becomes attractive. Competing banks offer substantial cash rebates to win your business:

• Loans S$450,000 to S$999,999: S$2,000-S$2,300 cash rebate
• Loans S$1,000,000 to S$1,499,999: S$2,500-S$2,800 cash rebate
• Loans above S$1,500,000: S$2,800-S$3,500 cash rebate

These rebates are specifically designed to cover your legal and valuation fees. In many cases, you'll receive a net positive amount (excess cash in your pocket) after all costs are deducted.

Legal Fee Waivers and Subsidies

Most major Singapore banks (DBS, OCBC, UOB, HSBC, Standard Chartered) now offer:

• Full legal fee waivers for loans above S$500,000
• Partial subsidies (50% of legal fees) for smaller loans
• Valuation fee waivers for refinancing customers

When you apply through Bank Rates ">Homejourney's bank rates page, you can see which banks offer fee waivers before you commit. This transparency helps you compare true net costs, not just interest rates.

Costs You Should NOT Ignore: The Clawback Clause

Some banks include a "clawback clause" in their refinancing offers. This clause requires you to repay part or all of the cash rebate if you:

• Redeem the loan within a certain period (typically 3-5 years)
• Refinance again to another bank before the clawback period expires
• Default on your loan payments

Always ask your new bank about clawback conditions before accepting their offer. A S$2,500 rebate with a 5-year clawback might not be worth it if you're planning to refinance again in 3 years.

Total Cost Comparison Table

Reading the Interest Rate Environment: Timing Your Refinance

Understanding SORA and Current Rate Trends

SORA (Singapore Overnight Rate Average) is the benchmark interest rate that determines most Singapore home loan prices. Unlike fixed rates, SORA-based loans adjust monthly based on this benchmark, which is set by the Monetary Authority of Singapore (MAS).

Most Singapore banks now offer home loans structured as:

• SORA + Spread: Your rate = 3M SORA + 0.25% to 1.00% (depending on the bank and your loan size)
• Fixed Rate: A locked rate for 1-3 years, then converts to SORA + spread after the fixed period

The chart below shows recent SORA trends to help you understand how rates have moved:

As you can see from the chart above, SORA rates have been relatively stable in recent months. Understanding this trend helps you decide whether to lock in a fixed rate now or accept a floating SORA rate.

Fixed Rate vs SORA Rate: Which is Better for Refinancing?

Choose a Fixed Rate if:

• You want certainty and predictable monthly payments
• You believe interest rates will rise significantly
• You prefer to avoid monitoring rate changes
• Your break-even analysis shows you need 4+ years to recover costs (fixed rates protect against rising costs)

Choose a SORA Rate if:

• You believe interest rates will fall or stay stable
• You're refinancing to maximize monthly payment reduction (SORA rates are typically lower than fixed rates)
• You have flexibility to handle potential rate increases
• Your break-even point is short (under 3 years) because SORA rates offer immediate savings

Hybrid Approach (Recommended): Many Singapore homeowners choose a 2-year fixed rate followed by SORA. This gives you certainty during the critical early repayment period while allowing you to benefit from potentially lower SORA rates later.

Current Market Conditions (February 2026)

As of February 2026, Singapore's home loan market shows:

• SORA-based loans starting from 1.36% (3M SORA + 0.25% spread)
• Fixed rates ranging from 1.50% to 1.78% for Year 1
• Most banks offering 2-year lock-in periods with free conversion options
• Cash rebates remaining competitive at S$2,000-S$2,800 for loans above S$500,000

For refinancing decisions, compare your current rate against these benchmarks. If you're paying above 2.50%, refinancing is likely worth it. If you're already at 2.00% or below, the savings may be marginal.

Timing Your Refinance: Lock-In Periods and Strategic Decisions

Understanding Lock-In Periods

Nearly all Singapore home loans include a lock-in period (typically 2-3 years) during which you cannot refinance without paying a redemption penalty. Understanding this period is crucial for timing your refinance strategically.

What happens during lock-in:

• You're locked into your current bank's rate
• If you refinance, you pay 1.5% of the outstanding loan as a penalty
• Some banks offer reduced penalties (0.75%) after Year 1
• You cannot switch banks without incurring this cost

What happens after lock-in:

• You can refinance with zero redemption penalty
• You can reprrice with your current bank at no cost
• Your monthly payment may adjust if you're on a floating rate
• You should actively review refinancing options

The Lock-In Period Decision Matrix

Scenario 1: You're Within Lock-In and Rates Have Dropped Significantly (0.50%+)

Action: Calculate whether the redemption penalty is worth paying. If your break-even point (including the penalty) is still within your remaining tenure, refinancing may be justified. Many homeowners find that a 0.50% rate drop justifies the 1.5% penalty, which is recovered within 3 years.

Scenario 2: You're Within Lock-In and Rates Have Dropped Slightly (0.20-0.40%)

Action: Wait until lock-in expires. The redemption penalty likely exceeds your savings. Use the time to improve your credit score and financial profile to negotiate better rates when lock-in ends.

Scenario 3: You're Near the End of Lock-In (Last 3-6 Months)

Action: Start the refinancing process now. Most banks take 2-4 weeks to approve refinancing applications. By starting early, you can finalize the new loan on the exact day your lock-in expires, avoiding any penalty.

Scenario 4: Your Lock-In Has Expired

Action: This is your golden opportunity. You can refinance with zero penalties. Even a 0.15-0.20% rate reduction is worth pursuing since there's no penalty to overcome. Compare rates across DBS, OCBC, UOB, HSBC, and Standard Chartered immediately.

Timing Refinancing with Market Cycles

While predicting interest rates is impossible, you can use these principles to time your refinance strategically:

• Rising Rate Environment: Refinance quickly to lock in current rates before they increase further. A fixed rate becomes more attractive than floating.
• Falling Rate Environment: Consider waiting a few months for rates to stabilize before refinancing. But don't wait too long—once rates stabilize, they may rise again.
• Stable Rate Environment: Refinance when your lock-in expires to capture any available rate improvements. Even small savings compound over 20+ years.

Homejourney's real-time SORA tracking feature helps you monitor rate movements and time your refinancing decision perfectly. Bank Rates ">Check current rates and SORA trends on Homejourney to stay informed about market conditions.

Step-by-Step Refinancing Process: From Decision to Completion

Phase 1: Preparation (Weeks 1-2)

Step 1: Gather Your Loan Documents

Collect the following documents from your current bank:

• Current mortgage statement showing outstanding balance
• Original loan agreement and terms
• Recent property tax bill (for property valuation reference)
• Latest payslips and employment letter
• Last 3 months of bank statements

Step 2: Check Your Credit Score

Your credit score affects the interest rate you'll receive. Request a free credit report from the Credit Bureau Singapore (CBS). If your score is below 700, consider waiting 2-3 months while you improve it by paying all bills on time and reducing outstanding debts.

Step 3: Calculate Your Break-Even Point

Use Homejourney's refinancing calculator to determine whether refinancing makes financial sense for your situation. Input your current loan amount, rate, remaining tenure, and the new bank's quoted rate. The calculator instantly shows your break-even point and total savings.

Phase 2: Comparison and Application (Weeks 3-4)

Step 4: Compare Rates Across Multiple Banks

Rather than visiting each bank individually, use Bank Rates ">Homejourney's bank rates comparison page to see current offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, and other major lenders. Compare not just interest rates, but also:

• Cash rebate amounts
• Legal fee waivers or subsidies
• Valuation fee waivers
• Free conversion options
• Clawback periods and conditions

Step 5: Submit Your Refinancing Application

Homejourney's multi-bank application system allows you to submit a single refinancing application that goes to all major banks simultaneously. Rather than visiting each bank branch, you can:

• Complete one application form with your details
• Use Singpass/MyInfo to auto-fill your information in seconds
• Let banks compete for your business by submitting competing offers
• Receive multiple loan offers within 3-5 business days

This approach saves you time and gives you genuine negotiating power. Banks know you're comparing their offers, so they're motivated to offer their best rates and most generous rebates.

Phase 3: Approval and Documentation (Weeks 5-8)

Step 6: Review and Compare Loan Offers

Once banks submit their offers, compare them side-by-side. Look beyond just the interest rate:

• Total monthly payment reduction
• Net cost after rebates and subsidies
• Break-even point (months to recover costs)
• Total savings over the remaining loan tenure
• Clawback conditions and restrictions

Step 7: Select Your New Bank and Provide Formal Acceptance

Once you've chosen the best offer, sign and return the Letter of Offer to your new bank. At this point:

• Your new bank will order a property valuation (typically completed within 5-7 days)
• Your new bank's lawyer will contact you to arrange documentation
• You'll receive a formal redemption quote from your current bank

Step 8: Arrange Legal Documentation

Your new bank's lawyer will handle most of the paperwork, including:

• Preparing the new mortgage deed
• Serving the redemption notice on your current bank
• Conducting the property search
• Arranging the signing ceremony (can be done online or in-person)

This typically takes 1-2 weeks. You'll need to sign documents in front of a lawyer or notary public.

Phase 4: Completion and Funding (Weeks 9-12)

Step 9: Final Verification and Approval

Your new bank conducts final checks:

• Property valuation is completed and reviewed
• Your employment and income are verified
• All documentation is reviewed for completeness
• Final loan approval is issued

Step 10: Redemption and Funding

On the agreed completion date:

• Your new bank's lawyer sends funds to your current bank
• Your current bank redeems your existing loan
• The new mortgage is registered at the Land Titles Registry
• Your new bank's loan is officially activated

Step 11: Confirm New Payment Details

Within 1-2 weeks after completion:

• Your new bank provides your new loan account number
• You'll receive a new mortgage statement showing your new rate and payment schedule
• You should set up a new GIRO arrangement for your monthly payments
• Cancel the old GIRO with your previous bank once you confirm the redemption is complete

Total Timeline: Most refinancing processes take 8-12 weeks from application to completion. The exact timeline depends on how quickly you provide documents and how busy your new bank's legal team is.

Money-Saving Strategies and Negotiation Tips

Strategy 1: Time Your Refinance to Maximize Cash Rebates

Banks adjust their refinancing cash rebates based on market conditions and lending appetite. To get the highest rebate:

• Apply during competitive periods: When multiple banks are actively competing for market share, rebates increase. Monitor Bank Rates ">Homejourney's rates page to see when rebates are at their peak.
• Apply for larger loan amounts: A S$1 million loan qualifies for S$2,500-S$2,800 rebates, while a S$400,000 loan might only get S$2,000. If you're on the borderline, consider refinancing with a slightly larger amount if you're planning a renovation or have other financing needs.
• Ask about broker incentives: When you apply through Homejourney's platform, mortgage brokers may offer additional incentives or negotiate better terms on your behalf.