How to Refinance Your Mortgage in Singapore and Save Thousands

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Introduction

For many Singaporean homeowners, taking out a mortgage is a necessity to finance their property purchase. However, what most people don’t realise is that the initial mortgage package they signed up for may not always remain the most cost-effective option over time. As interest rates fluctuate and financial institutions adjust their offerings, your original loan terms may no longer be optimal for your current financial goals.

This is where mortgage refinancing comes into play.

Refinancing your home loan in Singapore can help you save thousands of dollars in interest payments, lower your monthly instalments, or even change the loan structure to better suit your financial situation. In this comprehensive guide, we’ll explain what refinancing is, when and why you should do it, how the process works in Singapore, and how to maximise your savings.

What Is Mortgage Refinancing?

Mortgage refinancing is the process of replacing your existing home loan with a new loan from another bank, usually with a better interest rate or more favorable terms. This new loan pays off the existing mortgage, and you begin repaying the new lender under the new terms.

It’s important to distinguish refinancing from repricing, which refers to switching to another loan package within the same bank.

Why Refinance Your Mortgage?

There are several compelling reasons why homeowners in Singapore choose to refinance:

  1. Lower Interest Rates
    The most common motivation is to reduce your interest rate. Even a 0.5% difference in rate can translate to significant savings over a 20- or 30-year loan.

  2. Reduce Monthly Instalments
    With a lower interest rate or longer loan tenure, your monthly repayments can become more affordable.

  3. Shorten Loan Tenure
    Refinancing can help reduce the total duration of your loan, allowing you to pay off your mortgage faster and save on interest.

  4. Cash-Out for Investment or Renovation
    Some refinancing packages allow you to borrow a higher amount based on your property’s increased valuation.

  5. Switch Loan Type
    You may want to move from a floating rate to a fixed rate for predictability, or vice versa to benefit from lower market rates.

  6. Avoid High Reversion Rates
    After the lock-in period, many home loans revert to a bank’s board rate or a higher spread. Refinancing prevents you from paying inflated rates.

When Is the Right Time to Refinance?

Refinancing is most effective under the following conditions:

  • End of Lock-in Period
    Most home loans come with a 2- to 3-year lock-in period. If you refinance within this period, you’ll incur penalties.

  • Before the Interest Rate Rises
    If you’re on a floating package and rates are trending upward, refinancing into a fixed package can protect you.

  • After Property Value Appreciates
    If your property value has increased, you may qualify for better loan-to-value (LTV) ratios and larger loan amounts.

  • Before Your Free Repricing Option Expires
    Some banks allow free repricing during the lock-in period. Missing this window could cost you money in the long run.

Costs Involved in Refinancing

While refinancing can save you money, there are some upfront costs to consider:

  1. Legal Fees
    Typically range between $2,000 to $3,000. Some banks offer subsidies to offset this cost.

  2. Valuation Fees
    A property valuation is required to determine the new loan amount. Fees typically range from $200 to $500.

  3. Penalty Fees (if within lock-in period)
    Early repayment penalties are usually around 1.5% of the outstanding loan.

  4. Clawback on Subsidies
    If you received legal subsidies during your initial loan, banks may claw these back if you refinance within the stipulated period.

Tip: Many banks in Singapore offer refinancing packages with legal fee subsidies to reduce your net costs.

Steps to Refinance Your Home Loan in Singapore

Here’s a step-by-step breakdown of how refinancing works:

Step 1: Assess Your Current Loan

  • Check your outstanding loan amount, interest rate, monthly instalment, and lock-in expiry date.

  • Understand the reversion rate and how much it will increase after your current package ends.

Step 2: Compare Refinancing Packages

  • Use online mortgage calculators or work with a mortgage loan broker to compare available packages across banks.

  • Focus on interest rate, lock-in period, flexibility, legal subsidy, and total cost over the loan duration.

Step 3: Get Approval in Principle (AIP)

  • Submit your financial documents (NOA, payslips, CPF contribution history) to the new lender to assess your eligibility.

Step 4: Appoint a Law Firm

  • You’ll need to engage a law firm (usually from the bank’s approved panel) to handle the legal process of discharging your old loan and taking up the new one.

Step 5: Pay Off the Old Loan

  • The new bank will disburse funds to your current bank to pay off the old loan in full.

Step 6: Start Repaying the New Loan

  • Your new loan begins based on the agreed package, interest rate, and tenure.

Typical Timeline:
The whole refinancing process usually takes 6 to 8 weeks from start to finish.

Example: How Refinancing Saves You Money

Let’s consider an example to show the potential savings.

  • Outstanding loan: $500,000

  • Current rate: 4.00% (floating)

  • New rate: 3.10% (fixed for 2 years)

  • Remaining tenure: 25 years

Old Monthly Repayment: ~$2,639
New Monthly Repayment: ~$2,391
Monthly Savings: ~$248
Yearly Savings: ~$2,976
2-Year Savings: ~$5,952 (excluding legal fees)

If your new bank offers a legal subsidy of $2,000, your net savings over 2 years is approximately $3,952.

Common Mistakes to Avoid When Refinancing

  1. Refinancing Too Early
    Doing so during the lock-in period may lead to penalties that outweigh your savings.

  2. Focusing Only on Interest Rates
    A lower rate may come with high legal fees, less flexibility, or short lock-in periods. Always assess the total cost.

  3. Ignoring Cash Flow Needs
    Refinancing to shorten tenure and reduce total interest may increase monthly payments. Be realistic about your monthly budget.

  4. Not Using a Mortgage Broker
    Going directly to one bank limits your options. A mortgage broker can access better deals across the market, often at no extra cost to you.

Should You Refinance or Reprice?

Refinancing means switching to a new bank.
Repricing means staying with your current bank but choosing a new loan package.

Repricing Pros:

  • Fewer documents required

  • Shorter process (2–3 weeks)

  • No legal fees (in many cases)

Repricing Cons:

  • Fewer options than refinancing

  • May not offer the lowest rate in the market

  • No legal subsidies (usually)

Conclusion:
If your current bank offers a good repricing deal, it may be worth staying. But if another bank offers significantly better rates and legal subsidies, refinancing could provide greater long-term savings.

How to Maximise Savings When Refinancing

  1. Time It Right
    Start reviewing your mortgage 3–6 months before your lock-in period ends.

  2. Bundle With Other Products
    Some banks offer rate discounts if you take up insurance or invest with them. Ensure this aligns with your needs.

  3. Use CPF OA Wisely
    Consider using CPF Ordinary Account funds to pay off part of the principal during refinancing.

  4. Consider Loan Tenure
    Adjusting your loan tenure can help manage cash flow. Longer tenure = lower monthly payments but more interest.

  5. Look for Promotions
    Some banks offer time-limited interest rate promotions or fee waivers during festive seasons or property roadshows.

Who Should Refinance?

Refinancing makes sense for:

  • Homeowners with Expiring Lock-in Periods
    Especially if current rates are much higher than market rates.

  • Buyers on High Reversion Rates
    Many older loans revert to board rates of 4% and above.

  • Homeowners with Appreciated Property Values
    Improved valuations may allow better loan-to-value ratios.

  • People Looking to Reduce Debt Faster
    Refinancing to a shorter tenure can reduce long-term interest payments.

Conclusion

Refinancing your mortgage in Singapore is a smart way to lower your home financing costs, reduce monthly repayments, or restructure your loan to better fit your life stage. While the process involves paperwork, time, and some upfront costs, the potential savings can be substantial—especially if you’ve been on a higher interest rate for years.

The key is to plan ahead, understand the break-even point, and compare all available packages before committing. Whether you want to reduce costs, change from floating to fixed, or unlock equity from your property, refinancing offers flexible solutions for financially savvy homeowners.

And remember: you don’t have to navigate the process alone. A qualified mortgage loan broker can guide you through every step, compare packages across banks, and help you secure the best deal—often at no additional cost.

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