Lazy to Refinance Your Home Loan? You Could Be ‘Throwing’ Away Hundreds of Dollars Every Month

Cheryl Chiew
Lazy to Refinance Your Home Loan? You Could Be ‘Throwing’ Away Hundreds of Dollars Every Month
The era of low interest rates is ending. US Fed announced its first hike since 2018 on 16 March 2022, with six more interest rate hikes expected this year. And it’s only a matter of time before the rising interest rates inflate your monthly repayment amount.
Most Singaporeans know refinancing can save them money. Yet, they don’t. The biggest deterrent? Dealing with the tedious paperwork, according to our Singapore Consumer Sentiment Study H1 2021.

Watch Our Video on Refinancing

We get it: there are more enjoyable ways to spend your time than poring over documents and navigating the often hard-to-understand information. But you shouldn’t ‘throw away’ hundreds of dollars every month just because you’re ‘lazy’ to figure out refinancing.
If your home loan’s lock-in period is ending and refinancing is still a mystery, we’re here to demystify the process.

Refinancing 101: What You Stand to Gain

You already know refinancing is the process of replacing your current mortgage with a new one. You’re switching your existing HDB or bank loan to another loan offered by a different financial institution or bank for greater savings and lower monthly repayments.
If you breakdown refinancing, step by step, it would look like this:
  1. Check if you’re eligible to refinance your loan – look up your Total Debt Servicing Ratio (TDSR), credit score and make sure it’s a good time to refinance your home loan
  2. Cross-compare quotes from different banks – you can compare rates on your own, or simplify the process by reaching out to PropertyGuru Finance’s Mortgage Experts for recommendations
  3. Decide on your preferred loan
  4. Prep the necessary documents and deal with the relevant paperwork (our Mortgage Experts can help you with this too)

So, How Much Can I Actually Save With Refinancing?

HDB Loan to Bank Loan

We know it’s easy to take an ‘out of sight, out of mind’ approach for your mortgage. But it’s a shame to put off refinancing and miss out on savings, especially for HDB homeowners who took an HDB loan, like couple Justina Tan, 40, and Bernard Loh, 41.
In 2011, the pair took an HDB loan to finance their 5-room flat in Depot Road flat as it was the most appealing and direct option for them back then.
"An HDB loan enabled us to go with a lower downpayment. Despite knowing that the bank offered lower interest rates (1.4% to 1.8%) versus HDB’s 2.6%, we never gave it much of a thought and used funds from our CPF."
"After nine years of owning the flat, a friend during a conversation shared her refinancing story and we dived right in to find out more. The result – we are saving $210 per month due to refinancing! What’s more – the bank even gave us a bank subsidy of $2000 towards legal and valuation fees.”
However, do note that you can refinance from an HDB loan to a bank loan, but you can’t refinance from a bank loan to an HDB loan!

Bank Loan to Another Bank Loan

Refinancing from one bank loan to another is as straightforward as it sounds: you’re switching the loan you have with your existing bank to a loan with another bank. Similar to switching from an HDB loan to a bank loan, your potential savings can be in the hundreds.
But expect to pay legal and valuation fees of $1,650 to $2,250 when refinancing your loan. Most banks offer subsidies so check with an expert, like a mortgage broker, to see if you qualify.
However, if you stay on top of your refinancing and pay attention to when your lock-in period ends, you could refinance again, locking in even more savings! In the long run, all these savings offset your initial outlay in refinancing.

The Million-Dollar Question: Should I Refinance or Not?

Before you refinance, it’s crucial to make a balanced decision, with sound advice at hand. A good start would be to consider your financial goals and the amount of potential cost savings.
If you do decide to refinance your home loan package, check out this useful checklist of required documents. Alternatively, you can call up your existing bank to explore possible repricing options.
And of course, you’re not alone on this journey.
Like with most momentous financial decisions, it helps to have an expert to guide you through the process. At PropertyGuru Finance, our Mortgage Experts have years of mortgage experience. Not only do they offer unbiased, tailored advice and compare the most competitive interest rates across major banks in Singapore, but also work on documentation and can help with paperwork – all free of cost!
So, is refinancing really that difficult? Not really, with the right help. Reap substantial benefits and savings by taking the first step towards refinancing now!
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Disclaimer: The information is provided for general information only. PropertyGuru Pte Ltd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

More FAQs About Refinancing Your Home Loan

There is no single 'best' home loan package for everyone. Depending on your preferences and financial situation, you may compare the most competitive bank loans on PropertyGuru Finance to find the most suitable one for your needs.

Refinancing is when you change your existing home loan to a new package with a new bank. Repricing is when you switch to another package but within the same bank.

You can refinance HDB loans any time, but most HDB homeowners refinance after 4 to 5 years. This is after they have paid off at least 25% of the property's value/price so that they would not need to pay any more cash.

Unlike bank loans, an HDB loan does not have any lock-in period. You are free to redeem it or refinance your loan any time.

How long HDB refinancing takes may depend on the volume of applications received by the bank, as well as their individual processing times. However, it generally takes 4 to 6 weeks to complete.