WHEN’S THE BEST TIME TO REFINANCE MY HOME LOAN?
Timing matters. See when refinancing your mortgage could give you the biggest savings.
THINKING OF REFINANCING YOUR MORTGAGE?
When home loan rates start to fall, refinancing often becomes a popular topic — and for good reason. But lower interest rates aren’t the only reason it might be the right time to refinance your mortgage.
In this guide, we’ll walk you through key factors to consider before refinancing, and highlight common situations where it could make financial sense. With the right insights, you’ll be better equipped to decide if and when refinancing your home loan is the right move.
Key Things to Know Before Refinancing Your Home Loan
Before you jump into refinancing your home loan, it’s important to weigh a few key factors:
💸 1. Costs of Refinancing
Refinancing isn’t free. You’ll need to account for:
Legal fees
Valuation fees
Possible fire insurance costs
Early redemption penalties (if you’re still within your lock-in period)
Most banks in Singapore have a 2–3 year lock-in period, and may also require a 3-month notice to terminate the loan early. Some fees may be subsidised by your new lender — but always check the fine print. Make sure your long-term savings outweigh the upfront costs.
🧭 2. Your Long-Term Plans
Planning to sell your home soon? Refinancing may not be worth it. Because of lock-in periods and refinancing costs, you’ll need to stay in the property long enough to break even. If you’re likely to move or sell before then, refinancing could cost more than it saves.
⏰ 3. Timing Your Refinance
A good time to plan refinancing is about 4 months before your lock-in period ends — or earlier if interest rates are expected to rise. Leaving too early may trigger penalties or require you to repay any legal/valuation fee waivers from your current lender.
The Benefits of Refinancing Your Home Loan
Refinancing your mortgage can be a smart move — especially if you’re looking to lower your interest rate. One of the main reasons homeowners refinance is to secure better rates, which can translate to significant savings over the life of your loan.
It’s also a great option if your financial goals or circumstances have changed. Whether you’re aiming to reduce your monthly repayments, shorten your loan tenure, or free up cash for other priorities, refinancing can help you take better control of your finances.
Even a small drop in interest rate — say from 3.5% to 3.0% — can lead to tens of thousands in savings over the loan tenure, especially for loan amounts of S$500,000 or more. To get a better idea of how much you could save, it’s a good idea to use a refinancing calculator to estimate your new monthly repayments and total interest savings.
That said, don’t be swayed by promotional rates alone. Many attractive packages come with teaser rates that last only for the first 1–2 years, before reverting to a much higher board rate. Always check the ongoing rate after the lock-in period and compare multiple offers — not just from your current bank — to ensure you’re getting long-term value.
Refinancing for Your Financial Goals
Now that you know when you can refinance, let’s explore why refinancing could be a powerful tool to support your financial goals.
🔽 Want Lower Monthly Repayments?
You can extend your loan tenure (up to age 65 or 75, depending on the bank) to reduce your monthly payments and free up cash for other priorities.
🔼 Want to Pay Off Your Loan Faster?
If your income has increased or you’ve cleared other debts, shortening your loan tenure helps reduce the total interest paid — potentially saving you tens of thousands over time.
🎯 Choose a Term That Matches Your Life Stage
Whether you’re entering a new phase of life, planning to retire early, or building wealth through investments, selecting a loan structure that aligns with your goals is key to long-term financial health.
You don’t always need to restart a new 30-year loan. For example, if you’ve already completed 5 years on your mortgage, you can refinance into a 25-year term to maintain your original timeline and avoid unnecessary interest.
💡 Pro Tip: Ask your bank for a few amortisation schedules — these show how much of each monthly payment goes toward interest vs principal. Comparing these across different packages will help you choose the most cost-effective option over time.
In Singapore, refinancing gives you greater control over your mortgage — whether it’s to improve monthly cash flow, align repayments with major life events like your child’s university fees, or plan ahead for retirement and investments.
Loan Type: Fixed or Floating?
Choosing between a fixed-rate and floating-rate home loan depends on market conditions and your own risk appetite.
📉 Floating-Rate Loans
Usually pegged to SORA or a bank’s board rate, floating-rate packages often start with lower interest rates. However, they come with the risk of rate fluctuations — your monthly repayments can rise if interest rates increase.
Best for: Those comfortable with risk or expecting rates to fall.
🔒 Fixed-Rate Loans
Fixed-rate packages offer repayment certainty, making budgeting easier. These are ideal if you want stability or believe interest rates will continue rising.
Best for: Those who prefer predictability and want to avoid payment shocks.
🔀 Hybrid Packages
Some banks offer hybrid loans that combine fixed and floating elements. These can be useful in uncertain markets — but make sure you understand how and when the rates change.
Always review:
Adjustment schedules
Lock-in periods
Fees and repricing clauses
📝 Note: Private mortgage insurance isn’t a standard requirement in Singapore home loans, so your main focus should be on rates, fees, and flexibility.
How to Cash Out Your Home Equity
When refinancing your home loan, you may also have the option to cash out a portion of your built-up property equity — depending on the bank’s criteria and your financial profile.
🏗️ What Can It Be Used For?
Cash-out refinancing is commonly used to fund:
Major renovations that enhance property value
Children’s overseas education
Business ventures or investment opportunities
📊 How Much Can You Cash Out?
The amount you can unlock depends on:
Your property’s current market value
Your outstanding loan balance
The bank’s loan-to-value (LTV) limits — usually up to 75% for owner-occupied properties
The lender’s risk assessment and internal policies
⚠️ Important Considerations
Cashing out increases your total loan amount — which means higher monthly repayments and more interest paid over time. It’s crucial to use this option responsibly and only when you have a clear repayment strategy.
If the cash is intended for short-term or uncertain needs, consider alternatives like personal loans or a credit line, which may offer more flexibility with less long-term financial impact.
When to Refinance Your Home Loan After Major Life Changes
Life circumstances evolve — and sometimes your home loan needs to evolve with them. Refinancing can help you adapt your mortgage to reflect major personal changes while keeping your finances in check.
🧾 Common Scenarios Where Refinancing Makes Sense:
Adding a spouse after marriage
To formally include your partner in the mortgage and property ownership.Removing an ex-spouse or family member
After a divorce or restructuring of ownership, refinancing allows you to take over the loan fully or adjust the borrower profile.Changing the main income contributor
Especially relevant when CPF usage rules or HDB eligibility conditions shift, requiring a reallocation of who contributes to the mortgage.
🧠 What Banks Will Evaluate
Before approving the new loan structure, banks will assess:
Applicant(s)’ credit score
Outstanding debts and obligations
CPF contribution history
Income levels and employment stability
Compliance with Mortgage Servicing Ratio (MSR) or Total Debt Servicing Ratio (TDSR) guidelines
Refinancing during major life changes is not just about securing a better rate — it’s also about ensuring your loan structure matches your current reality.