Home Loan Refinancing Break-Even in Singapore: Worked Example
A lower refinancing rate does not automatically mean you should switch banks. The practical question is whether the savings recover legal fees, valuation costs, penalties and subsidy clawbacks before you sell, refinance again or repay the loan.
Simple break-even formula
Break-even months = net switching cost ÷ estimated monthly saving.
Net switching cost should include legal and valuation fees, administrative costs, early-redemption penalties and clawbacks, less any confirmed cash benefit or subsidy.
Worked example
- Outstanding loan: S$700,000
- Remaining tenure: 22 years
- Current rate: 2.60%
- Illustrative new rate: 1.50%
- Legal and valuation costs: S$3,000
- Confirmed cash benefit: S$2,000
- No early-redemption penalty in this example
Using a standard principal-and-interest calculation, the estimated current instalment is S$3,485 and the estimated new instalment is S$3,115. The estimated reduction is about S$370 monthly.
Net switching cost is S$1,000 after the benefit, giving a simple break-even period of approximately 2.7 months. Without that benefit, S$3,000 of costs would take approximately 8.1 months to recover.
This is an illustration, not a quotation. Actual savings depend on the final balance, tenure, rate, fees and how rates change.
Costs borrowers often overlook
- Early-redemption penalties
- Clawback of existing subsidies or benefits
- New legal and valuation fees
- Repricing charges
- A longer new lock-in period
- Higher pricing after the promotional period
Repricing versus refinancing
Repricing changes the package with your existing bank and may involve less paperwork. Refinancing moves the loan to another lender, enabling a wider comparison but usually involving legal completion and additional costs.
Frequently asked questions
Is instalment saving the same as interest saving?
Not always. Extending tenure can reduce the instalment while increasing the repayment period. Compare costs over a consistent period.
What if I may sell soon?
Include the expected sale date, new lock-in and redemption conditions. A short holding period may not recover switching costs.
Review our home-loan refinancing options and request a free, no-obligation comparison.
Source and review: MAS refinancing rules. Reviewed by the Loan$upermart Mortgage Advisory Team on 8 September 2026.
General information only. Rates, costs, eligibility and savings are not guaranteed.
