Best Home Mortgage Loan Refinancing 2024

As interest rates in home loans fluctuate according to the local and global interest rate environment, it’s important for homeowners to always be on the lookout for the best mortgage rates possible. Refinancing your home loan to lower the interest you pay contributes towards saving thousands of dollars over the course of your loan tenure.

Remember, purchasing a home in Singapore is a six- to eight-digit affair. That’s no small sum at all, and every dollar saved helps. Although it’s possible to buy a house purely with cash to avoid paying any interest at all, most public and private homeowners would need to take up a home loan to finance their home purchase.

Read on to discover what the best home loan refinancing package is in Singapore. Whether you’re refinancing your home loan for a HDB flat or private home, we’ve got you covered.

Best Home Loan Refinancing for HDB Flats

According to official figures from the Housing Development Board (HDB), over 80% of Singapore’s resident population live in a HDB flat. Therefore, most people taking up and refinancing a home loan would be for a HDB flat. And because homeowners in Singapore are generally financially savvy, they’d typically refinance their loan every few years, which makes it important to keep up to date with the best home loan refinancing rates.

As of 3 March 2024, these are the six best mortgage refinancing rates for HDB flats. These include the top three floating interest rate packages and leading three fixed interest rate deals.

In the table below, we’re assuming a S$500,000 principal amount with a 25-year tenure:

More on Refinancing Your Home Loan With a Fixed Interest Rate

We’ve found that the very best fixed rate refinancing rates offered by banks in Singapore tend to be about 10 – 15% cheaper than the average fixed rate refinancing loan.

Therefore, choosing one of the cheapest refinancing rates available can save you up to S$30,000 compared to the average fixed rate home loan refinancing package.

In addition to choosing a home loan with a low rate, it’s also essential to consider how much the loan costs in terms of monthly instalments. Similarly, it’s important to consider whether you’d like the flexibility to refinance your loan sooner rather than later.

To compare these options, you should keep an eye out for lock-in periods, which dictate the length which you’re unable to re-negotiate the terms of your loan for.

For example, some banks will let you refinance your home loan after just one year while other banks will have lock-in periods of up to three years.

More on Refinancing Your Home Loan With a Floating Interest Rate

While fixed rate refinancing grants you the ability to secure a given interest rate for a set amount of time, you can also choose to refinance your mortgage with a floating rate loan.

This loan type charges interest based on reference rates that frequently change over time. In Singapore, we follow the Singapore Overnight Rate Average Interest Rate Benchmark, also known as SORA.

The best floating rate home loan refinancing products also tend to be about 10-15% lower than the average floating rate home loans. Therefore, choosing one of the cheapest options can also save you up to S$30,000.

Related: 3 Reasons Why You Might Need Mortgage Insurance

Best Home Loan Refinancing for Private Properties

While private residences are less common than HDB flats in Singapore given the statistics shown above, condominium and landed property owners are largely in the same boat as HDB homeowners as they’ll usually still need to take up a home loan in order to buy their house. That’s because private property in Singapore can easily cost several million dollars.

Below, we explain the various private home loan refinancing options available in Singapore and highlight the most affordable refinancing packages around.

As of 3 March 2024, these are the six best mortgage refinancing rates for a private property. These include the top three floating interest rate packages and leading three fixed interest rate deals.

In the table below, we’re assuming a S$3 million principal amount with a 25-year tenure:

Related: Should You Get a Fixed Home Loan or a Floating Home Loan?

How to Choose the Best Home Loan Refinancing Package

Home loans can be a daunting financial products for borrowers, even though they’re essential for almost everyone. A large part of that is due to the amount you’ll be borrowing from the bank.

Additionally, while they appear to be straightforward, these loans are actually quite complex. Not only do home loan interest rates change frequently, the cheapest loan type can also change depending on trends in the lending market.

Furthermore, home loans typically require multiple documents when you’re making your application. This then further complicates the process. Due to these complexities, we recommend you to consult a mortgage broker when shopping for a home loan.

However, we also encourage you to do your own research in order to find the most affordable home loan refinancing package possible.

Why Should You Refinance Your Home Loan?

According to our research, homeowners in Singapore typically refinance their home loans frequently; around once every two to four years.

While this trend may be influenced by a decline in interest rates during the COVID-19 pandemic, home loan refinancing can be an excellent money-saving tool for any homeowner no matter the interest rate environment.

Here are the top two reasons to refinance your current home loan:

When applying to refinance your home loan, lenders will often enquire about your current loan’s interest rate before trying to quote you a lower interest rate in order to win or maintain your business.

Needless to say, this can work out quite well for homeowners. However, please keep in mind that most banks require a remaining loan balance of at least S$100,000 and a minimum of five years left in your current tenure.

With lower interest rates, you will enjoy lower monthly payments. If you choose to forego refinancing your existing mortgage, your interest rate will almost always increase, leading to higher monthly instalments and total interest costs.

When Should You Refinance Your Current Home Loan?

It’s important to choose the right time to refinance your current mortgage. Your current bank requires a three-month notice before you refinancing and switching banks.

Therefore, it’s important you know when your lock-in period ends in order to refinance your housing loan at the right time.

Although you can refinance your loan during the lock-in period, you will incur a set of penalty fees. Do plan ahead and give yourself at least four months to kickstart the refinancing process. Set a calendar alert for when your lock-in period ends to remind yourself when’s the time to refinance your current home loan.

Home Loan Costs: Interest Expenses and Refinancing Fees

Prospective homeowners are typically most concerned with interest rates when comparing home loans and home loan refinancing. This is logical because interest rates dictate the majority of a home loan’s cost.

Additionally, because the credit criteria banks use to approve a home loan application are nearly identical, your credit score is not a significant factor in causing one bank to significantly spike its interest rate quoted to you.

You can rest easy and check out quotes from the various banks as it’d be an apples-to-apples comparison for the most part.

Aside from the home loan’s interest rate, you should be aware of each loan’s flexibility in terms of renegotiating terms and refinancing. This is important to Singaporeans because most homeowners here would refinance their home loans every two to four years, as mentioned earlier on.

For this reason, it’s crucial to keep an eye out for restrictions and fees such lock-in periods, legal fees, valuation fees and fire insurance premiums. These can reduce the savings you get from refinancing your loan.

For instance, consider a home loan of S$500,000. By refinancing from 2.0% p.a. to 1.5% p.a., you can save S$2,500 per year.

However, legal fees in Singapore can cost about S$2,500 while valuation fees can range from S$500 to S$1,000. Additionally, some lenders charge an additional fee to borrowers who refinance during their loan’s lock-in period. Although you shouldn’t be doing this, it’s still a penalty that you need to keep in mind when considering a particular bank’s loan quote.

Below contains a list of fees associated with home loan refinancing.

Fees Involved in Home Loan Refinancing

Related: How to Avoid Paying ABSD When Buying Residential Properties in Singapore

How to Choose Between Fixed and Floating Home Loan Refinancing Rates

One of the toughest questions to answer when trying to refinance your home loan is whether you should choose a fixed or floating rate loan.

Both loans are valuable depending on the context of your loan and interest rates available. When trying to decide whether to refinance your home loan with a fixed or floating rate, it’s important to understand how rates will behave during the next two to four years (the lock-in period) and how that will end up impacting your total cost of borrowing.

It’s not necessary to consider a much longer time horizon because you can always refinance your loan right after your lock-in period concludes.

Below, we discuss a few possible scenarios you must consider, and whether a fixed or floating rate is more preferable depending on the context of each situation.

When Interest Rates are Flat or Declining: Floating Rates

If interest rates are relatively stable or declining, it’s generally prudent to refinance your home loan with a floating interest rate.

Floating rates tend to be lower than fixed rates because banks are willing to offer a lower rate in the short term, in order to obtain your business and charge you higher rates once the market interest rates increase.

On the other hand, fixed rates tend to be slightly higher as banks charge a premium for loans with set rates.

When Interest Rates are Rising: Fixed Rates

When overall interest rates are rising, it’s generally advisable to refinance with a fixed rate than a floating rate.

Although fixed rates are typically slightly higher than floating rates, they provide borrowers an opportunity to save if market rates rise significantly in the meantime.

For example, imagine you’re able to refinance your loan at a fixed rate of 1.5% p.a. for the next three years or a floating rate starting at 1% p.a. The latter might sound more attractive, but if market interest rates rise soon after you refinance your loan, the floating rate could very well double or triple while the fixed rate remains at 1.5% p.a.

While the difference in percentages may not seem very significant, it could actually result a difference of around S$5,000 in annual interest fees. Remember, a home purchase involves a sum ranging from six to eight digits. A small increase in your home loan interest rate ends up hurting your wallet a lot more than you might expect.

Methodology

We conducted our review based on data available online across the various banks in Singapore. The data we analysed would be most relevant to potential borrowers, including interest rates, lock-in periods, fees, and subsidies. The banks we took a look at were:

• Bank of China
• CIMB
• Citi
• DBS
• Hong Leong Finance
• HSBC
• Maybank
• OCBC
• RHB
• SBI Singapore
• Standard Chartered
• Singapura Finance
• UOB

Home Mortgage Loan Refinancing Frequently Asked Questions

What is a lock-in period for a home loan?

The lock-in period refers to the minimum number of years required to stay with the current bank issuing the home loan. During this period, if you choose to refinance the loan, partially repay, or even fully repay it, you’ll likely be hit with a set of penalty fees.

That’s why it’s important to only consider refinancing your loan after this lock-in period ends.

What is currently the best home loan in Singapore?

Home mortgage loan rates change daily and the best home loan might not be the same since you last checked. It’s important to frequently check interest rates leading up to your home loan application, or when you’d like to refinance your current mortgage loan.

On the bright side, ValueChampion makes this process easy for you. We regularly compare the best home loans to make your decision a quick and seamless one.

What is the difference between repricing and refinancing?

Repricing refers to changing your home loan interest rate package under the same bank. There are repricing fees that usually range between S$800 and S$1,000 as well.

Since banks will usually offer lower interest rates to attract new customers, repricing packages offered by your current bank tend to be worse than shopping at another bank.

If you can find an attractive offer from another bank, refinancing your home loan instead can save you a lot more money.

How many times can I refinance my home mortgage loan?

There’s no limit to the number of times you can refinance your home loan. As long as there’s the opportunity to save on the interest you pay, you should consider refinancing your home loan. This should be done every two to four years.

Check out our roundup of the best home mortgage loans in the market today!

Read More:

• What’s the Average Cost of Housing in Singapore?
• Pros and Cons of Paying Off Your Mortgage Early
• 2024 Outlook for Singapore’s Property Sector and S-REITs to Look Out For
• Real Estate Investment: How to Build a Solid Property Portfolio
• How Much of Your Income Should You Spend on Housing?

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