Refinancing Your Home Loan in Singapore: When It Is Worth Doing and What You Save

Most Singapore homeowners set up their mortgage when they buy and then do not review it again for years. This is often a mistake.

Home loan packages and interest rates change. If you took a loan at 3.5% two years ago and current rates for a comparable package are 2.8%, refinancing can save you a meaningful amount over the remaining tenure.

Here is how to think about it.

When to Consider Refinancing

The best time to refinance is when your current lock-in period has ended or is about to end. Refinancing during a lock-in typically incurs a penalty of 1.5% of the outstanding loan amount, which can erase the savings from refinancing.

Set a reminder six months before your lock-in period ends to start comparing packages. Many banks allow you to commit to a new package in advance, locking in a rate before your current lock-in expires.

Beyond lock-in timing, refinancing is worth evaluating if:

• Market interest rates have fallen significantly since you took your current package
• You have improved your financial profile (better income, lower debt) and qualify for better terms
• You want to switch from fixed to floating (or vice versa) based on your rate view
• Your loan has grown significantly in remaining balance and the rate savings compound over a long remaining tenure

The Cost of Refinancing

Refinancing involves costs that must be weighed against savings:

Legal conveyancing fees: typically $1,500 to $2,500 depending on the law firm

Valuation fee: typically $300 to $500

Any prepayment penalty from your existing bank (if still in lock-in)

Some banks offer a legal fee subsidy or full legal fee reimbursement as a refinancing incentive. This is common in competitive refinancing packages. Factor in whether your new bank is absorbing these costs.

Calculating the Break-Even

The basic break-even calculation: divide the total refinancing costs by the monthly savings on your new rate.

Example: refinancing saves you $200 per month. Legal fees are $2,000. Break-even is 10 months. After 10 months, every month is savings. If you plan to hold the property for at least two to three more years, refinancing makes sense.

Repricing vs Refinancing

Before going to a new bank, ask your existing bank for a repricing offer. Repricing (switching to a new package within the same bank) has no legal fees and is faster. It is often (though not always) a less competitive offer than what the market provides, because your bank knows switching costs create inertia.

Get a repricing offer first, then compare it against at least two external refinancing offers. The difference between the two tells you whether it is worth the effort of switching banks.

Frequently Asked Questions

How often should I review my home loan in Singapore?

Review your home loan at least every two to three years, or whenever your lock-in period ends. Interest rate environments change, and the package you signed two years ago may no longer be the best available. A 30-minute comparison with a mortgage broker can save thousands of dollars over the remaining tenure.

Can I refinance an HDB loan from HDB to a bank loan?

Yes. After your HDB concessionary rate loan, you can refinance to a bank loan. Once you switch from an HDB loan to a bank loan, you cannot switch back. Bank loans typically offer lower interest rates than the HDB concessionary rate (currently 2.6%), but come with floating rate risk. This switch is permanent, so it should be a considered decision.

Does refinancing reset my loan tenure?

Not necessarily. You can specify the remaining tenure when you refinance. Most people keep the remaining tenure the same, which reduces their monthly payment without extending their debt. Some people shorten the tenure on refinancing to pay off faster with the savings from the lower rate.

What documents do I need to refinance a home loan in Singapore?

Typical documents include NRIC, your latest CPF statement, your latest three months of payslips or income tax assessment, the existing loan statement, and the property title details. Your new bank or mortgage broker will provide a full checklist.

How much can I save by refinancing?

Savings depend on your loan amount, current rate, new rate, and remaining tenure. On a $700,000 loan with 20 years remaining, a 0.5% rate reduction saves approximately $1,800 per year or $150 per month. On a $1 million loan, the savings are proportionally higher. Use a mortgage refinancing calculator for your specific numbers.

Thinking About Refinancing?

Serene can help you understand whether your current loan is competitive and what questions to ask your bank or mortgage broker.

Talk to Serene about your home loan