What does refinancing a home loan mean?
Refinancing means moving your outstanding housing loan from one bank to another, on new terms. The property does not change hands and the loan amount usually stays the same — what changes is the lender, the interest rate and the package conditions.
It is distinct from repricing, which is switching to a different package with the bank you are already with. Repricing is cheaper and faster; refinancing usually wins on rate. Almost every decision in this area comes down to which of the two is worth more after costs.
When is refinancing actually worth it?
When the interest saved over the new package period exceeds the cost of getting there. That is the whole test, and it depends far more on your outstanding balance than on the size of the rate gap.
On our worked example — S$600,000 outstanding, 20 years left, 4.2% moving to 3.1% — the instalment falls from S$3,699 to S$3,358. That is S$342 a month against S$3,000 of cost, so break-even lands at 9 months, comfortably inside a 2-year package.
| Amount | |
|---|---|
| Current instalment | S$3,699 |
| New instalment | S$3,358 |
| Monthly saving | S$342 |
| Cost of switching | S$3,000 |
| Break-even | 9 months |
| Net gain over the 2-year package | S$9,928 |
The same rate gap on a S$200,000 balance would take far longer to recover. Rules of thumb about "0.5% is worth switching" are unreliable — the balance is what decides it.
Do I have to pass TDSR again to refinance?
Not for the home you live in. MAS exempts owner-occupiers from the Total Debt Servicing Ratio threshold when refinancing a housing loan on an owner-occupied residential property. This is a deliberate concession for people who bought a home to live in, and it is the single most under-known fact in this topic.
Investment property loans are treated differently. They can still be refinanced above the TDSR threshold, but only where the borrower commits at the point of refinancing to a debt reduction plan — repaying at least 3% of the outstanding balance over a period of no more than three years — and passes the lender's own credit assessment.
| Type of loan | TDSR applies? | Condition |
|---|---|---|
| Owner-occupied housing loan | No | — |
| Investment property loan | Yes | Debt reduction plan repaying at least 3% of the outstanding balance over no more than 3 years, plus the lender's credit assessment |
A great many people never refinance because they assume a change in income or a new car loan would sink the application. On an owner-occupied home, that concern does not apply.
What does refinancing cost in Singapore?
Four things, and only the first two apply to everyone.
- Legal and conveyancing fees — typically S$1,800–3,000. Many banks offer a legal subsidy that covers most or all of it.
- Valuation fee — typically S$300–800, depending on property type.
- Prepayment penalty — roughly 0.75%–1.5% of the outstanding amount, but only if you redeem during your current lock-in period. Outside lock-in it is normally nil.
- Subsidy clawback — if your current package came with a legal or valuation subsidy and you are still inside its clawback window, commonly three years, that subsidy becomes repayable.
The clawback is the one people forget. A subsidy taken two years ago can make an otherwise sensible switch uneconomic, and it does not appear on any rate comparison table.
When should I start, and how long does it take?
Start four to five months before your lock-in expires. Most lenders require around three months' notice of redemption, so the paperwork has to begin well before the date you actually want the new loan to start.
Leave it until the lock-in has already lapsed and you spend those months on your bank's prevailing rate, which is almost always the most expensive rate they offer. That gap is a real cost and it is entirely avoidable with a calendar reminder.
Set the reminder for five months before expiry, not on the expiry date itself.
Should I reprice with my existing bank instead?
Ask them first, always. Repricing involves little or no legal work, usually carries a small administrative fee or none at all, and takes weeks rather than months. If your existing bank will match or come close to the market, the lower friction often wins on total cost even at a slightly worse rate.
The practical approach is to get a refinancing quote first and then take it to your existing bank. A concrete competing offer is more persuasive than a request.
Can I refinance an HDB loan?
You can refinance from an HDB concessionary loan to a bank loan at any time — there is no lock-in on the HDB loan to escape. But the move is permanent: once you refinance an HDB flat to a bank, you cannot return to the HDB concessionary rate on that flat.
That makes the decision structurally different from an ordinary refinance. You are not just choosing a rate for the next two years; you are giving up a rate pegged at 0.1% above the CPF Ordinary Account rate for the entire remaining life of the loan. Weigh it over the full tenure, not the package period.
Refinancing from one bank to another on an HDB flat is an ordinary refinance and carries no such one-way risk. It is only the move out of the HDB loan itself that cannot be reversed.
Work out your own number
Refinance Break-Even Calculator
Enter your outstanding balance, both rates and every switching cost. It reports the saving over your package period rather than an inflated lifetime figure.
Open the calculator →Frequently asked questions
Is refinancing worth it in Singapore?
It depends on your outstanding balance, the rate gap and the cost of moving. On S$600,000 with 20 years left, going from 4.2% to 3.1% saves S$342 a month and breaks even in 9 months. The same rate gap on a much smaller balance may never pay for itself.
Do I need to pass TDSR to refinance?
Not for an owner-occupied home — MAS exempts owner-occupiers from the TDSR threshold when refinancing a loan on the property they live in. Investment property loans are not exempt but can still refinance above the threshold if the borrower commits to repaying at least 3% of the outstanding balance over no more than three years and passes the lender's credit assessment.
What is the difference between repricing and refinancing?
Repricing is switching package within your existing bank; refinancing is moving the loan to a different bank. Repricing is cheaper and faster with little or no legal work. Refinancing usually offers a better rate but carries legal and valuation fees, so compare the two on total cost rather than headline rate.
How much does it cost to refinance a home loan?
Typically S$1,800–3,000 in legal fees and S$300–800 for valuation, often partly covered by a bank subsidy. Add a prepayment penalty of about 0.75%–1.5% of the outstanding amount if you are still inside your lock-in, and any subsidy from your current package that gets clawed back.
How long does refinancing take?
About three months, because most lenders require roughly three months' notice of redemption. Start comparing four to five months before your lock-in expires so the new loan begins the moment the old one is free.
Can I refinance during my lock-in period?
Yes, but you will normally pay a prepayment penalty of around 0.75%–1.5% of the outstanding amount. On a S$600,000 loan a 1.5% penalty is S$9,000, which is usually enough to push break-even past the end of the new package.
Can I refinance from an HDB loan to a bank loan?
Yes, at any time — the HDB concessionary loan has no lock-in. But you cannot go back. Once an HDB flat is refinanced to a bank, the 2.6% concessionary rate is gone for that flat permanently, so judge the move over the full remaining tenure rather than the next two years.
How often can I refinance?
There is no legal limit, but each move carries fees, and most packages have a lock-in of one to three years plus a subsidy clawback window of about three years. In practice that makes a two-to-three year cycle the natural rhythm.
Will refinancing affect my credit score?
A refinance involves a new credit application and will be assessed like any other loan, so it appears in your credit file. It is not treated as new borrowing in the sense of increasing your total debt, since the new loan discharges the old one.
Sources
Every rate on this page was read directly from IRAS on . Stamp duty rules change with little notice — confirm against IRAS before you commit to a purchase.
- ↗ MAS — Who TDSR applies to, including the refinancing exemption
- ↗ MAS — TDSR rules on refinancing fine-tuned (2016)
- ↗ MAS — SORA benchmark rates
- ↗ HDB — Housing loan from HDB
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