Updated 21 Sep 2026. A lower mortgage instalment is useful, but it is not the same as an interest saving. To decide whether to refinance, compare the interest and fees over the same period, starting with the same debt and remaining tenure. Then check what happens if you sell, repay early or need to change the loan again.
This guide is for homeowners comparing an existing loan, a repricing offer from their bank and a refinancing offer from another lender. The worked figures are hypothetical, not September bank quotations or forecasts. They show why a slightly lower rate can produce only a small advantage once switching costs are included.
Put three written offers side by side
MoneySense distinguishes refinancing from repricing: refinancing moves the loan to another lender; repricing changes the package with your existing lender. Request the repayment schedules and property loan fact sheets, including the rate after the opening period, exit charges and any subsidy clawback.
Use the balance expected on the switching date, not the original amount borrowed. Keep the remaining tenure unchanged for your first comparison. If an offer extends the term, put it in a separate column so a slower repayment of principal does not masquerade as cheaper borrowing.
Our suggested comparison sheet has five entries for each option: monthly payment, interest over your chosen holding period, debt remaining at its end, net fees, and the cost of an early exit. Pick a period that fits your plans. A household expecting to move in two years should not decide from a projected 25-year saving.
A S$700,000 comparison over two years
Assume a fully disbursed S$700,000 loan with 25 years remaining. Compare staying at 3.8%, repricing to 3.1% and refinancing to 2.9%. For this illustration only, each rate remains unchanged for 24 months. Repricing costs S$500 and refinancing costs S$3,000 net of any assumed benefits. There is no existing-loan exit penalty, notice charge or subsidy repayment, and fees are paid separately rather than borrowed.
| Option | Monthly | Interest + fees |
|---|---|---|
| Stay 3.8% | S$3,618 | S$51,946 |
| Reprice 3.1% | S$3,356 | S$42,775 |
| Refinance 2.9% | S$3,283 | S$42,519 |
| Option | Interest | Debt left |
|---|---|---|
| Stay 3.8% | S$51,946 | S$665,114 |
| Reprice 3.1% | S$42,275 | S$661,731 |
| Refinance 2.9% | S$39,519 | S$660,723 |
All figures are rounded to the nearest dollar. Total instalments over 24 months are S$86,832 if staying, S$80,544 if repricing and S$78,796 if refinancing. The first table adds the assumed fees to interest; it does not add principal repayment to the financing cost.
On these assumptions, refinancing saves about S$9,427 in interest and fees against staying. But it saves only about S$256 against repricing. The refinance rate is 0.2 percentage points lower than the repricing rate, yet its extra S$2,500 fee absorbs most of the two-year interest advantage. A different fee quote or exit date can reverse the choice.
The refinance instalment is about S$335 lower than the existing payment. Multiplying that payment reduction by 24 does not give the interest saving: the refinance also repays more principal. Principal reduces what you owe and is therefore shown separately from the cost of borrowing.
LovelyHomes calculated these figures using equal monthly payments, an annual rate divided by 12, and an amortising balance. The monthly payment is P × r ÷ [1 − (1 + r)−n], where P is the opening loan, r the monthly rate and n the remaining number of payments. Calculations use unrounded values; displayed totals are rounded. Actual bank conventions, payment dates, rate resets and fees can change the result.
A longer tenure can make the instalment look better
If the same hypothetical refinance were stretched to 30 years at 2.9%, the monthly payment would fall to about S$2,914. After 24 payments, however, about S$669,844 would still be owed, compared with S$660,723 on the 25-year refinance. That is roughly S$9,121 more debt, despite the smaller instalment. The two-year interest would also be slightly higher, about S$39,770.
This does not mean a longer tenure is always unsuitable. Lower compulsory payments may be valuable during a career break. It means you should identify what you are buying: monthly breathing room, rather than assuming the whole payment reduction is a saving. The lender must confirm whether a proposed tenure is available to you.
Price the date you might leave
Read your existing and proposed offer letters for the actual lock-in end, redemption notice, partial-repayment terms and subsidy clawback. These can run on different clocks. There is no universal 0.5-percentage-point rate gap that makes switching worthwhile.
In the example, adding a hypothetical S$5,000 exit charge to refinancing would raise its two-year financing cost to S$47,519. It would still beat staying under the assumed rates, but would cost about S$4,744 more than repricing. A bank’s written redemption figure is more useful than a generic penalty percentage copied from another package.
Run a second comparison ending on the date you might sell. Include any charge then due under the new loan. If the household may relocate for work or upgrade soon, the flexibility to leave can be worth more than a small opening-rate reduction.
TDSR treatment depends on the loan’s purpose
The earlier version of this article incorrectly said every refinancer must pass the same TDSR test. MAS’s current explanation provides an exemption for refinancing owner-occupied housing loans. This does not guarantee that a bank will approve an application or remove its own credit assessment.
For investment-property loans above the threshold, MAS describes a route requiring a debt reduction plan of at least 3% of the outstanding balance over no more than three years, together with the lender’s credit assessment. Do not treat cash-out borrowing as an ordinary own-stay refinance. As one practical example, DBS’s repricing document guidance treats investment properties and owner-occupied properties with cash-out term loans separately. Ask the lender to classify your actual facility before relying on an exemption.
Keep CPF payments running through the change
CPF Board’s refinancing instructions require you to authorise your lawyer to apply, with the existing financier’s final or latest statement and the new lender’s offer. The existing CPF monthly payment arrangement ceases when the lawyer’s application is approved. Confirm the last old payment, first new payment and any cash needed between them.
For HDB owners using CPF, check Home Protection Scheme arrangements too. CPF Board says owners who are not already covered must apply after being informed that refinancing has been processed; cover remains subject to approval. Owners already covered or exempt should check how the change affects that position.
Do not assume a bank subsidy arrives before your solicitor’s bill, or that every refinancing charge can be funded from OA. Ask the lawyer to identify each eligible CPF item, its payment date and any cash balance. The old blanket statement that all refinancing legal costs must be cash has been removed; eligibility must be checked for the actual expense and application.
Choose for your household, then arrange the switch
A family with uncertain income should compare the higher-rate payment and the cash reserve left after fees. An investor should test vacancy and repairs alongside the mortgage, rather than assume rent covers every instalment. Someone considering moving from an HDB loan to a bank loan should also note MoneySense’s warning that a bank loan cannot subsequently be refinanced back to HDB.
Request the lender’s document list and the lawyer’s completion timetable before serving notice. Confirm approval, valuation requirements, the offer’s validity and when the new package begins. There is no single completion period guaranteed for all refinances. If repayments are already difficult, contact the lender promptly about available arrangements instead of assuming a new bank will solve the shortfall.
For the broader purchase and household budget, see our Singapore mortgage guide. This article provides a comparison method, not a recommendation of a bank, an available rate or a personalised lending assessment.
Sources and calculations checked 21 September 2026. Removed unsupported market-rate charts, forecasts, fixed savings thresholds and incorrect TDSR wording. Editorial review was performed by the same assistant, not an independent financial adviser.
Featured photograph: Robertson Quay, photographed in 2011 by Bryanmackinnon, CC BY-SA 3.0. Resized for web use; housing context, not the property in the hypothetical example.
