Mortgage Loan Refinancing vs Repricing in Singapore: What’s the Difference and Which Should You Choose?

Introduction

If you’re a homeowner in Singapore, chances are you’ve heard of the terms refinancing and repricing. While both are strategies to reduce your mortgage costs, many borrowers confuse the two or don’t fully understand how each one works. Choosing between refinancing and repricing could mean the difference between thousands of dollars in savings—or locking yourself into a deal that doesn’t suit your needs.

This comprehensive guide explains the key differences between refinancing and repricing in Singapore’s home loan market, outlines the pros and cons of each, and helps you decide which path to take for maximum benefit.

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What Is Mortgage Refinancing?

Refinancing refers to switching your home loan from your current bank to another bank. The goal is usually to secure a lower interest rate, better terms, or a more flexible package.

Refinancing is common when:

• Your lock-in period has expired

• Your existing interest rate has reverted to a high board rate

• A competitor bank is offering a better deal

When you refinance, a new bank pays off your old loan, and you start a new loan contract with the new bank.

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What Is Mortgage Repricing?

Repricing is when you change your home loan package within the same bank. You don’t switch lenders; you simply negotiate for a better deal or accept one of the bank’s current in-house offers.

Repricing is suitable when:

• You are loyal to your current bank

• You want to avoid the paperwork of refinancing

• You are still within your lock-in period, but eligible for internal repricing

• Your bank is offering competitive repricing packages

Repricing can sometimes be done at a lower cost and with less documentation.

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Key Differences Between Refinancing and Repricing

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When Does Repricing Make Sense?

Repricing makes sense if:

1. You’re Still Happy with Your Bank

If your current bank’s customer service, systems, and benefits suit you, repricing might offer savings without the hassle.

2. You Want a Quick and Simple Process

Repricing is fast. Since you’re staying with the same bank, the admin and legal processes are minimal.

3. Your Bank Offers Competitive Packages

Some banks offer internal repricing rates that are comparable to market rates. Ask for a repricing letter and review the options available.

4. You’re in the Tail-End of Your Lock-In Period

Some banks allow repricing during the last 3–6 months of your lock-in period without penalties.

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When Should You Refinance Instead?

Refinancing might be a better choice when:

1. Other Banks Offer Better Interest Rates

Singapore’s competitive banking landscape means banks frequently roll out promotional refinancing packages to capture market share.

2. You Want Access to Different Loan Features

Different banks offer packages with unique features like interest offset, flexible repayment, or cash-out refinancing.

3. Your Current Bank’s Repricing Is Not Competitive

Sometimes, repricing rates are higher than what competitor banks offer. Always compare before committing.

4. Your Lock-In Period Has Ended

This is the best time to refinance, as you can avoid early redemption penalties and switch freely to a better package.

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Understanding the Cost Differences

Repricing Costs

• Repricing admin fee: $500–$800 (varies by bank)

• No legal or valuation fees

• No mortgage registration fees

• No changes to CPF payment arrangements

Refinancing Costs

• Legal fees: ~$2,000–$2,500

• Valuation fee: ~$150–$500

• Total cost: ~$2,500–$3,000

• Often subsidised by the new bank

Some refinancing banks offer legal fee subsidies, but these may be clawed back if you redeem the loan early (usually within 3 years).

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Comparing Potential Savings

Assume you have a $500,000 outstanding loan with 20 years remaining:

• Current rate: 4.2% (reversion rate)

• Bank A (same bank) offers repricing at 3.6%

• Bank B (new bank) offers refinancing at 3.2%

Repricing:

• Monthly repayment at 3.6%: ~$2,946

• Total interest over 20 years: ~$207,040

Refinancing:

• Monthly repayment at 3.2%: ~$2,830

• Total interest over 20 years: ~$179,200

• Savings: ~$27,840 over 20 years

• Less legal fees: ~$2,500

• Net savings: ~$25,340

In this case, refinancing offers significant savings, despite the upfront costs.

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Pros and Cons of Repricing

Pros:

• Faster process (2–4 weeks)

• Lower upfront costs

• Minimal paperwork

• No changes to existing CPF arrangements

• No need for new loan approval

Cons:

• Limited to in-house packages

• May still involve a lock-in period

• Less room for negotiation

• No legal subsidies or promotional perks

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Pros and Cons of Refinancing

Pros:

• More banks = more choices

• Lower rates with better terms

• Legal subsidies and cash rebates often available

• Ability to restructure loan features (e.g., tenure, partial repayment)

Cons:

• More paperwork

• Longer processing (6–8 weeks)

• Higher upfront cost (though often offset by subsidies)

• Reset of lock-in period

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Important Considerations Before Deciding

1. Interest Rate Outlook

If rates are expected to rise, a fixed-rate refinancing package might be better. If rates are projected to fall, repricing to a floating package may be more cost-effective.

2. Future Plans

If you plan to sell the property or make lump-sum repayments, choose a package with no or low penalties for prepayment. Repricing may offer better flexibility here.

3. Loan Tenure

If you’re seeking to extend or shorten your loan tenure, refinancing offers more freedom to restructure the loan compared to repricing.

4. Total Savings vs Effort

Weigh the potential interest savings from refinancing against the hassle and cost involved. Sometimes, repricing might offer “good enough” value with less effort.

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Should You Use a Mortgage Broker?

Yes. A mortgage loan broker can:

• Compare refinancing offers across multiple banks

• Negotiate better terms

• Assist with paperwork and timelines

• Review your repricing offers and advise if they’re competitive

• Save you time and money

Most brokers provide their services at no cost to you, as they are paid by the banks.

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Common Mistakes to Avoid

1. Blindly Choosing Repricing Without Comparing
   Always check the market to see if better deals exist.

2. Refinancing Too Early
   If you’re still in a lock-in period, the penalty (typically 1.5% of outstanding loan) may offset any savings.

3. Missing the Lock-In Expiry Window
   Once your lock-in expires, you may revert to a high board rate. Don’t delay action.

4. Overlooking Legal Fee Clawbacks
   Refinancing within 3 years of a legal subsidy may trigger a clawback. Read the terms carefully.

5. Ignoring the Total Cost of Loan
   Look beyond the monthly instalment—compare total interest over the remaining tenure.

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Case Study: Repricing vs Refinancing

Samuel’s Profile:

• Condo in Tiong Bahru

• Outstanding loan: $650,000

• Current rate: 3.95%

• Repricing offer from existing bank: 3.50%

• Refinancing offer from new bank: 3.15% (with legal subsidy)

Comparison:

• Repricing saves ~$260/month

• Refinancing saves ~$400/month

• Annual savings: ~$4,800 vs ~$3,120

• Legal fees: $2,500 (subsidised by new bank)

• Net benefit of refinancing over 2 years: ~$2,180 more than repricing

Samuel chose to refinance, locking in a lower rate for 2 years and restructuring his loan to a 25-year tenure for better monthly cash flow.

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Conclusion

Both repricing and refinancing are powerful tools for managing your mortgage in Singapore—but they serve different needs. If you’re looking for convenience and speed, repricing may be your best bet. If you’re aiming for maximum savings and more flexibility, refinancing could unlock more value in the long run.

Before making a decision, always:

• Review your current loan and lock-in details

• Compare offers from multiple banks

• Calculate total savings (not just monthly instalments)

• Consider your long-term plans

To make the process easier and ensure you’re getting the best deal, consider engaging a mortgage loan broker. Their market expertise, access to exclusive rates, and end-to-end support can help you make a smarter, stress-free mortgage decision.