How to Refinance a Home Loan in Singapore

The Total Debt Servicing Ratio (TDSR) does not apply when you refinance the housing loan on a home you live in. MAS disapplies the framework for owner-occupied refinancing regardless of when the property was bought, so a household whose income has fallen or whose other debts have grown can still move to a cheaper package.

That exemption is the reason refinancing is worth checking even when a new purchase would not qualify. The work is in the lock-in terms, the legal subsidy clawback and the break-even, not in the headline rate.

Repricing and refinancing are different transactions

	Repricing	Refinancing
Lender	Same bank	New bank
New mortgage document	No	Yes
Legal work	Usually none	Required
Fresh valuation	Usually none	Usually required
Admin or conversion fee	Bank's stated fee	No conversion fee, but legal and valuation costs
Package choice	What that bank offers	The whole market
Typical time needed	Weeks	Two to three months

Repricing is the lower-friction option and often the right one when your bank's offer is close to market. Refinancing earns its cost when the rate gap is wide enough to clear the switching bill within your next lock-in period.

Ask your existing bank for its repricing sheet before you approach anyone else. It sets the number every external offer has to beat.

TDSR does not apply to an owner-occupied refinance

MAS applies TDSR to new property loans, capping total monthly debt obligations as a share of gross monthly income. The framework is disapplied for borrowers refinancing the housing loan on an owner-occupied residential property.

Two consequences follow. A borrower who would fail TDSR on a new purchase can still refinance the home they live in. And a borrower whose loan tenure exceeds current regulatory limits may keep the remaining tenure at the point of refinancing rather than being forced to compress it.

An investment property is treated differently. A refinance there is assessed against TDSR in the normal way. Our TDSR and MSR guide sets out how the ratio is computed and which income is haircut.

The exemption removes a regulatory obstacle, not the bank's credit assessment. The new lender still reviews income, employment, repayment history and the property's value before issuing a Letter of Offer.

Lock-in and clawback decide the switching cost

Read these four terms in your existing facility letter before you shop:

• Lock-in period. Redeeming inside it triggers a penalty, commonly a percentage of the redeemed amount.
• Legal subsidy clawback. If the bank paid your legal fees, it can reclaim them when you redeem within a stated period, often longer than the lock-in.
• Notice period. Banks generally require written notice before redemption. Missing it can add a month of interest or a fee.
• Partial prepayment terms. Some packages penalise lump-sum reductions during the lock-in.

A clawback period that outlasts the lock-in is the trap that catches most switchers. The lock-in can be over while the subsidy is still repayable, which turns an apparently free switch into a bill.

Work the break-even on your own numbers

Rate differences compound over a large balance. For a $600,000 outstanding balance with 20 years remaining, the monthly instalment on a standard amortising loan works out as follows:

Interest rate	Approximate monthly instalment
2.4%	$3,150
2.6%	$3,209
3.0%	$3,328
3.5%	$3,481
4.0%	$3,636

These are arithmetic illustrations on one balance and one tenure. They exclude property tax, insurance and maintenance, and your lender sets the actual instalment.

Moving from 3.5% to 2.6% on that balance saves about $272 a month, or roughly $3,264 over a year. Set that against your total switching cost:

Break-even months = total switching cost ÷ monthly saving

Assume your legal and valuation quotes total $2,000, an assumption you should replace with real quotes. At $272 a month the switch pays for itself in about seven months. A two-year lock-in then leaves roughly 17 months of net saving before the package resets.

If the break-even runs past the end of the new lock-in, the switch is not paying for itself. If you expect to sell inside that window, check the new lock-in penalty before signing anything.

Floating packages after SIBOR

SIBOR was discontinued immediately after 31 December 2024. Banks completed the move of about 87,000 retail loans to replacement pricing, and Singapore floating-rate mortgages are now quoted off Compounded SORA, the Singapore Overnight Rate Average, or a bank's own board rate.

The distinction is worth understanding before you choose. Compounded SORA is a published benchmark administered by MAS, so the reference rate moves transparently and the bank's margin sits on top of it. A board rate is set by the bank and can be revised at its discretion.

When comparing floating packages, look at the spread over the benchmark for every year of the package. A package with a thin first-year spread that widens afterwards can cost more across a full lock-in than a flat spread.

Fixed packages remove rate movement for a stated period only. The rate after that period is the one that determines your cost for most of the loan.

Start three to four months before the lock-in ends

Refinancing runs on a sequence that does not compress well:

1. Request your bank's repricing offer and your redemption statement.
2. Collect Letters of Offer from other banks and compare spreads across all years.
3. Serve the required notice on your existing bank.
4. Complete the new bank's valuation and credit assessment.
5. Instruct a solicitor for the mortgage and redemption work.
6. Complete on a date that lands after the lock-in expires.

Starting a month out usually means paying the revert rate while the paperwork catches up. The revert rate is where lenders make back the promotional discount, so those months are expensive.

Owners moving from an HDB concessionary loan should note the direction of travel. An eligible owner can refinance to a bank, but cannot bring that mortgage back to HDB afterwards. Our HDB loan versus bank loan comparison covers what that one-way switch gives up.

Checks before you commit

Work through these on the specific offer in front of you:

• Compare the new package against your bank's repricing sheet, not against your current rate alone.
• Confirm the clawback period on any legal subsidy you have already received, and whether it extends past your lock-in.
• Calculate the break-even in months and check it falls well inside the new lock-in.
• Ask each bank for the instalment at the offered rate and at a rate two percentage points higher.
• Check the spread for every year of the package, not year one.

Refinance when the break-even is short, the clawback is clear and you expect to hold the property past the new lock-in. Reprice when your bank's offer is close and you would rather avoid the legal work. Stay put when the gap is narrow enough that the switching cost eats the saving, and revisit at the next lock-in expiry.

Sources: MAS, refinancing rules for housing loans, MAS, who TDSR applies to, MAS, TDSR rules on refinancing fine-tuned, MAS, interest rate benchmarks transition, ABS, banks complete benchmark transition from SOR and SIBOR to SORA.