REFINANCING YOUR HOME LOAN: WHAT SINGAPORE HOMEOWNERS NEED TO KNOW
Refinancing your home loan can help you save on interest, unlock your property’s value, and manage your repayments more efficiently. This guide explains the full refinancing process, what to consider before making the switch, associated costs, and how to choose the right legal support to ensure a smooth transaction.
THINKING OF REFINANCING YOUR MORTGAGE?
Why Consider Refinancing?
Many homeowners take out long-term housing loans but stick with their original interest rates for years—even when better options become available. Refinancing gives you the chance to switch to a new loan with a different bank at a more favourable interest rate or repayment term. You can also increase your loan amount to unlock home equity.
If interest rates have dropped since you first took your loan, refinancing could significantly lower your monthly repayments and total interest paid.
How the Refinancing Process Works?
Compare Loan Offers: Find a refinancing offer that gives you a better rate or terms.
Engage a Law Firm: Choose a law firm from the bank’s approved panel to handle the legal work.
Notify Existing Bank: Your lawyer will inform your current bank of your intention to redeem your loan.
Redemption Statement: Your current bank issues a preliminary redemption statement.
Sign Legal Documents: Meet with your lawyer to sign the necessary documents.
Prepare Funds (if needed): If your new loan doesn’t cover the full amount owed, top up your account or prepare a cashier’s order.
Completion Day: Final payments and paperwork are processed. Your lawyer updates the mortgage records.
Monthly Payments Begin: Your new lender informs you of your monthly instalment schedule. Update your CPF payment instructions if applicable.
Note: Keep paying your existing loan instalments until the process is completed to avoid late payment fees.
What to Consider Before Refinancing?
Lock-In Period: Redeeming your loan during this period may trigger penalties or clawbacks of perks like legal subsidies or cashback.
Legal Fees: If your law firm is on the panel for both banks, they can act for all parties—saving costs. Some banks offer subsidies (up to 0.4% of the loan or S$2,000).
Administrative Fees: Banks may charge for services like property valuation.
CPF Usage: Legal fees and monthly repayments can be paid with CPF. However, admin fees must be paid in cash.
Choosing the Right Law Firm
A good property law firm can save you both time and money. If they’re approved by both your current and new lender, you can simplify the process and reduce legal costs.
For further help, consider reaching out to an experienced property lawyer who can guide you through the refinancing process.