Suppose you have S$600,000 left on your home loan with 20 years to run, currently at 4.0 percent a year, and a new package offers 3.2 percent. On the existing rate the monthly repayment is about S$3,636. At the new rate, on the same balance and tenure, it falls to roughly S$3,388. That is a monthly saving of about S$248, or close to S$3,000 in the first year alone.
Refinancing to another bank costs around S$2,500 in legal and valuation fees here, so you break even in about 10.1 months. After that the saving is yours. Over the full 20 years remaining, the saving net of those fees comes to roughly S$56,997. The catch to watch is the lock-in period on your current loan, since leaving early can trigger a penalty of around 1.5 percent of the balance that would wipe out the gain.
Item
Amount
Repayment at 4.0 percent
S$3,636/mo
Repayment at 3.2 percent
S$3,388/mo
Monthly saving
S$248
Break-even on S$2,500 fees
10.1 months
Net saving over 20 years
S$56,997
How it is calculated
The tool computes the standard amortising monthly repayment twice on the same outstanding balance and same remaining tenure: once at your current rate and once at the new rate. The difference between the two is your monthly saving. Multiplying that saving by the number of months remaining, then subtracting the legal and valuation fees (or a repricing admin fee), gives the net lifetime saving. Break-even is simply the fees divided by the monthly saving, the number of months before the switch pays for itself. This compares like for like on rate alone, so it does not model a change of tenure, cash rebates beyond the fees you enter, or any early-redemption penalty from leaving your existing package during a lock-in period.
Frequently asked questions
Refinance or reprice?
Repricing switches to a new package with your existing bank, usually cheaper and faster with a small admin fee. Refinancing moves to another bank, which can offer a lower rate but incurs legal and valuation fees (often subsidised). Watch for lock-in periods, where leaving early triggers a penalty.
Can CPF savings be used for refinanced home loans?
Yes. CPF Ordinary Account savings can continue to service the monthly instalments after refinancing, subject to the Valuation Limit (VL) and Withdrawal Limit (120 percent of the VL for properties with remaining lease of at least 60 years). You do not need to refund CPF already used just because you switch lenders, but your CPF usage records follow the property. Check the CPF Board guidelines if your property is approaching the withdrawal limit.
Is there stamp duty when I refinance?
No Buyer Stamp Duty (BSD) or Additional Buyer Stamp Duty (ABSD) applies when you simply refinance the same property. However, if the refinanced loan is a new legal mortgage, the lender typically stamps the Mortgage document itself. Under IRAS rules, mortgage stamp duty is S$500 for loans up to S$500,000 and S$1 per S$1,000 (or part thereof) above that, capped at S$500 for most standard residential mortgages. This cost is usually absorbed by the bank as part of a subsidy package.
What is the Total Debt Servicing Ratio (TDSR) rule for refinancing?
MAS TDSR rules cap total monthly debt obligations at 55 percent of gross monthly income. When you refinance, the new lender re-assesses TDSR against current income. If your financial situation has changed since the original loan was granted, you could be offered a smaller loan or asked to reduce other debt first. Owner-occupiers refinancing an existing property loan where no additional funds are drawn down may apply under the TDSR exemption, but the exemption does not apply if you are extracting equity or increasing the outstanding amount.