How To Refinance Home Loan In Singapore: A Comprehensive Guide To Benefits, Costs, And Options

Personal Finance

How To Refinance Home Loan In Singapore: A Comprehensive Guide To Benefits, Costs, And Options

September 11, 2023

The cost of a home in Singapore is extremely high. Therefore, the vast majority of buyers nowadays rely on home loans to finance the acquisition of their homes.

The current low-interest rate climate and the abundance of refinancing possibilities make this a great moment to reassess your mortgage. You can find a way to cut costs.

You can better assess whether or not a refinance is the best course of action if you take the time to learn more about how to refinance home loan and the many procedures that one should follow. Let’s get right into it!

Refinancing In Singapore

Refinancing In Singapore

Refinancing a house loan allows homeowners to transfer their existing mortgage to a different financial institution to secure a reduced interest rate. This can potentially result in long-term savings.

Typically, refinancing a house loan occurs whenever the borrower reaches the fourth year of their mortgage term or after that. This is because conventional house loan packages tend to increase their interest rates following three years. During which the interest rate would probably escalate.

This presents an opportunity to assess whether an alternative financial institution can provide a more favourable interest rate.

Pros Of Refinancing Your Property In Singapore

Before moving forward, it’s crucial to consider the potential advantages of refinancing a house loan. The most frequent refinancing benefits are:

  • Making use of the current low-interest rate environment.
  • Decreasing regular payments.
  • Changing from an adjustable to a fixed interest rate or vice versa.
  • Altering how long or short you have to pay back a loan.
  • Refinancing to obtain part of the equity in one’s home.
  • Removing the need for monthly PMI premiums.

Why Consider Home Loan Refinance In Singapore

One should refinance their home loan to enjoy the benefits of the refinancing process. Some of the reasons for refinancing include:

Securing Lower Interest Rates

Saving money on interest is as easy as switching to a bank that provides a 1% or 2% lower rate. The result is a decrease in the regular payment.

Considering the instalment is now cheaper, the property’s rental income may go from being a drain on your finances to a source of profit.

Switching Loan Types

Borrowers may switch home loan programs if their current one is not meeting their needs. To better understand this, consider the illustration below:

Financially wise borrowers may take advantage of historically low interest rates by locking into a variable mortgage when rates are low. When borrowers anticipate an increase in interest rates, they may try to refinance into a fixed-rate loan for a set period.

This allows them to lock in current low rates and better plan for the future. Packages with a fixed interest rate typically cost more. But they offer the most security because of set rates for the loan’s first three to five years. Banks in Singapore do not yet provide customers with the option of a permanently set interest rate.

Accessing Property Equity

Refinancing might reduce your monthly payments and provide you access to additional capital. With cash-out refinancing, you can use the equity you’ve built up as collateral to get a larger loan.

While this increases your overall debt, it’s sometimes a better option than using credit cards or other types of loans to pay for significant expenses like home renovations or university tuition.

Debt Consolidation

Refinancing may be an option if you’re looking to consolidate your debts, but your interest rates are more significant than a home loan.

Personal loans can have interest rates as high as 20%, while credit cards typically charge between 15% and 18%. Home interest rates average around 5%, whereas interest rates on credit cards and personal loans are typically three to four times as high.

You should utilise the refinancing proceeds to pay off the existing balance on your credit card(s) or personal loan(s), thereby realising interest savings of three to four times the original amount borrowed.

When Should You Consider Refinancing In Singapore?

Situations when you might consider refinancing in Singapore include when you want to:

  • Pay the loan off quicker
  • Tap into equity
  • Lessen the monthly instalments
  • Lengthen the repayment period

Before refinancing, there are several factors you should take into consideration.

Lock-In And Clawback Timeframe

The clawback period, typically three years, is when a borrower can get their subsidy money back if they pay off their loan early. There is also typically a lock-in term of two to five years, during which a 1.5% penalty of the redeemable sum applies if the loan payment happens early.

It’s important to remember that some loan packages don’t require a clawback or lock-in period. If the loan has such terms, the borrower must balance the pros and downs of refinancing during the penalty period.

Having Two Loans, Each Of Which Has A Distinct Due Date 

Understanding refinancing timing and market conditions for refinancing in Singapore is crucial. All loans from some financial institutions’ bundles are payable by a specific date.

However, the maturity dates of the individual loans in the package vary, and the borrower may still be responsible for paying the late fee that comes with the loan with a later maturity date.

The Present Mortgage Has Been In Place For Years

More of your monthly payment will go toward the principal balance of your loan as time goes on. As a result, equity will increase.

You often repay interest with the first instalment payment made on a loan. Therefore, it may not be wise to refinance the mortgage late in the game because doing so will reset the repayment schedule. Conduct more research to determine if making the change is financially viable.

How To Refinance Your Home Loan In Singapore

The application process is very similar to obtaining a fresh mortgage loan. Here are the refinance steps one should take:

  1. Firstly, it is advisable to assess the status of your existing mortgage to see if it remains within the lock-in period.
  2. Go through your credit history and score.
  3. Calculate the home equity you have.
  4. Establish contact with several financial institutions to get information about the current offers provided by banks. Consider the effective lease rate (ELR), whether or not there is a lock-in period, and the absorption of relocation expenses fully or partially. Assess all the deals to determine their significance and alignment with the initial goals.
  5. Negotiating to secure a more favourable ELR if one does not immediately need to cash out is advisable. Next, do a comprehensive comparison of the offers provided by various banks before deciding on which bank to work with.
  6. Find a mortgage lawyer.
  7. Ultimately, please make a more suitable selection, proceed with the registration process, and indulge in its advantages.

Bank Document Requirements In Singapore

You’ll need to hand over the following items to a refinancing lender:

  • Mortgage statements from the previous six months detailing the amount you still owe to the lending institution.
  • Most up-to-date building insurance policy and notice of council charges.
  • Statements from all unsecured loans, credit cards, and other debts you’ve had in the last three months.
  • Paystubs and bank records from the past two months are also required.
  • Tax filings.
  • Photocopy of your official government ID.
  • Proof of legal residence in Singapore.
  • Sources of funding.

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Refinancing Costs Breakdown

Some things to consider before moving forward with your home refinancing are the cost, such as:

Price Of Moving

You would have to pay this money to obtain a new loan. When you refinance, you must pay for a valuation, legal expenses, disbursements, and stamp duty. If you’re considering refinancing for potential savings analysis, consider this and analyse potential savings versus costs.

Refinancing Vs. Repricing In Singapore

Refinancing your loan is switching to a loan from another financial institution or licensed moneylender. Repricing requires you to stay with the same bank and take out a new loan. When refinancing, you can choose from any loan package available in Singapore, allowing you to select the loan with the most favourable interest rate.

Repricing And Refinancing Pros And Cons

The expenses and problems of refinancing are higher than those of repricing, though. The application process can move quickly because repricing entails choosing a new loan with varying conditions, interest rates, and loan repricing differences within the same bank.

Some banks even let borrowers reprice during the lock-in period for a fee of $500 to $800, which they may waive in exceptional circumstances.

Refinancing can be more difficult and expensive because you might incur up to $2,500 in fees and costs. You might also be subject to a 1.5% penalty if you did so during your lock-in period, and it might take a couple of weeks before eligibility requirements can conclude and paperwork is in place.

Nonetheless, this does not make refinancing the worst option. For this reason, only individuals willing to put in the time and effort required to shop around for the best loan with the lowest interest rate should consider refinancing. Those who want a straightforward experience can consider repricing.

Refinancing FAQs In Singapore

Can I Refinance My Loan Several Times?

There is no restriction on how many times you can refinance your mortgage if you save money on interest. However, with some planning, you can sidestep the additional cost.

How Can I Benefit From Refinancing?

Refinancing has many benefits, such as lower monthly instalments, better interest rates, and debt consolidation.

Which Is Preferable: Loan Modification Or Refinancing?

A mortgage modification may be your best alternative if you cannot refinance. Lenders won’t agree to a loan modification unless you’re behind on payments.

Singaporean Refinancing Tools And Resources

Several homeowner refinancing resources and additional property market guides are available that help with refinancing strategies. They include:

  • Use a property valuation calculator to determine the value of a particular residential property in Singapore.
  • Refinancing calculator lets you find Singapore’s cheapest home loan rates to save monthly money.
  • Property tax calculator will help you calculate the amount of tax you must pay annually.
  • Use the mortgage calculator to determine how much of your monthly income to set aside for mortgage payments and other monthly obligations.

Click here: Explore loans for refinancing your home with lower monthly instalments at Credit Thirty3 in Singapore today!


Obtaining a new loan with a lower interest rate by refinancing is a great strategy to maximise your financial savings.

Refinancing is a popular option for borrowers, especially homeowners, when the economy experiences significant shifts that cause interest rates to fluctuate rapidly. It can generally pave the way to significant cost reductions and exciting new financial horizons.