Free Singapore extra mortgage repayment calculator. See how much interest you save and how many months you cut off the loan by making extra monthly payments.
How much interest do you save by overpaying your Singapore mortgage?
Total interest saved
—
Months saved
—
New payoff period
—
Effective annual saving rate
—
Your breakdown
Updates live as you type
Item
Amount
How extra mortgage payments reduce your total interest
Every dollar of extra principal payment reduces the balance on which future interest is charged. Because interest compounds monthly on the outstanding balance, reducing the principal early has an outsized effect on the total interest paid over the life of the loan. A S$500 extra monthly payment on a S$600,000 loan at 3.5 percent over 20 remaining years saves roughly S$55,000 in total interest and cuts about 3 years from the term. The saving is front-loaded: the same S$500 extra payment made in year one is worth more than the same payment made in year 15, because it prevents interest from compounding on a larger base for longer.
This calculator simulates the original loan with the required monthly payment, then simulates the same loan with the extra payment added each month. The difference in total interest paid across both simulations is the interest saving. The new payoff date is the month in which the accelerated simulation clears the balance to zero.
CPF OA at 2.5 percent versus mortgage overpayment
Singapore has a CPF OA floor rate of 2.5 percent per year on the first S$20,000 and 3.5 percent on the next S$40,000 (the additional 1 percent on combined CPF balances up to S$60,000). If your mortgage rate is 3.5 percent, overpaying the mortgage with cash earns a guaranteed 3.5 percent risk-free return. Overpaying with CPF OA funds earns only the difference between 3.5 percent and the 2.5 percent you forgo in the OA, which is just 1 percent. Cash is therefore a more efficient fuel for overpayment than CPF OA. Use spare cash first before tapping the OA.
Lock-in periods and when to start overpaying
Bank mortgage loans in Singapore typically carry a lock-in period of two to three years during which early repayment attracts a penalty of 0.75 to 1.5 percent of the repaid sum. On a S$600,000 loan, a 1 percent penalty is S$6,000, which erases most of the interest saving from a year of overpayment. The optimal strategy for most borrowers is to wait until the lock-in expires, then make regular partial prepayments. HDB concessionary loans have no lock-in and no prepayment penalty, so overpayment can start immediately. If you receive an annual bonus or receive a lump sum, applying it as a partial prepayment after lock-in expiry is typically the most cost-effective use.
Frequently asked questions
Should I overpay my Singapore mortgage or invest the extra money?
The answer depends on comparing the mortgage interest rate with the expected investment return. For a bank loan at around 3 to 4 percent, overpaying guarantees a risk-free return equal to the mortgage rate. CPF OA earns a floor rate of 2.5 percent and SA earns 4 percent; if your SA rate equals or exceeds the mortgage rate, topping up CPF may be more efficient than overpaying the loan. Investing in equities over the long term has historically returned 6 to 8 percent a year but carries volatility, so overpaying the mortgage is the lower-risk choice for risk-averse borrowers.
Are there penalties for early repayment of a Singapore bank loan?
Most Singapore bank mortgages have a lock-in period, typically two to three years, during which early repayment incurs a penalty of 0.75 to 1.5 percent of the prepaid amount. Outside the lock-in period, partial or full prepayment is usually fee-free. If you are considering aggressive overpayment in the early years of the loan, check your loan agreement for the lock-in terms. HDB concessionary loans have no prepayment penalty at any point, making them more flexible for borrowers who anticipate receiving a windfall or bonus.
What is the CPF OA opportunity cost of making extra mortgage payments?
If you use CPF OA savings to make extra mortgage repayments, you forgo the 2.5 percent per year interest that would have accumulated in the OA. Additionally, any CPF withdrawn for the property must be returned to CPF with accrued interest at 2.5 percent when you sell. So the real saving from overpaying with CPF is the difference between the mortgage rate and 2.5 percent. If your mortgage rate is 3.5 percent, the net benefit of overpaying with CPF is roughly 1 percent per year on the overpaid amount. Overpaying with cash earns the full mortgage rate as a risk-free saving.
How do I make extra repayments on my HDB or bank loan?
For HDB concessionary loans, partial prepayments can be made at any time through the HDB e-Service portal. There is no minimum partial repayment amount and no penalty. For bank loans, the process varies by bank but typically involves submitting a partial prepayment request through internet banking or at a branch. Confirm whether the prepayment reduces your monthly instalment or shortens the remaining term. Most borrowers prefer to shorten the term and keep the instalment constant, which produces the greater interest saving. Ask your bank to apply the prepayment to principal reduction.