Best Time to Refinance Your Home Loan in Singapore

When it comes to managing your housing loan, timing is everything. With interest rates shifting and financial goals evolving, knowing the best time to refinance your home loan in Singapore can make a big difference. Whether you’re looking to slash your monthly payments, shorten your loan tenure, or simply get a better deal, refinancing offers a powerful tool—if done right. This guide explores when to refinance a mortgage, how to identify the right moment, what pitfalls to avoid, and how to unlock savings through a well-timed mortgage loan refinance.

Why Timing Matters In Refinancing

The impact of interest rate shifts on a home loan can be significant. For most borrowers, the initial 2–3 years of their loan come with a promotional rate. After this honeymoon period, rates often rise. This is where savvy homeowners begin exploring refinancing home loan in Singapore options to avoid higher monthly instalments.

So, when can I refinance my house? While you can technically refinance at any time, it’s usually most beneficial 4 to 6 months before your loan’s lock-in period expires. This window gives you enough time to scout better refinance home loan rates without incurring early repayment penalties.

What Makes A Good Time To Refinance?

Let’s break down what qualifies as a good time to refinance home. It often comes down to the spread—the portion banks add to the benchmark interest rate (e.g. SORA). During the promotional years, the spread is low. But from the fourth year onward, this usually increases.

For example, your rate might shift from “3M SORA + 0.7%” in Year 3 to “3M SORA + 1.2%” in Year 4. This 0.5% increase can push monthly payments up significantly. That’s your cue: start shopping for better packages before that spike kicks in.

Let’s say you refinance in Year 4 with a lower rate—say, 1.2% instead of 2.2%. Even with the typical $3,000 cost of refinancing mortgage, your savings over the next few years could exceed $30,000. That’s not just pocket change—it’s financial breathing room.

The Cost-Benefit Calculation You Can’t Ignore

To determine if refinancing is worthwhile, compare your current package with what’s available. If your existing plan is more than 0.3% higher than others, you’re likely overpaying. Even a seemingly small reduction in interest can translate into substantial long-term savings.

Always calculate the full picture:

New monthly payment after refinancing
Cost of refinancing home loan
Potential savings over 3–5 years
Break-even point (how long it takes for savings to exceed costs)

This kind of analysis helps answer when can I refinance my home loan in a more informed way.

Avoiding Refinancing Traps: When NOT to Refinance

Sometimes, the best move is no move at all. Refinancing isn’t just about chasing a lower rate. There are legitimate reasons to hold off.

You’re still in the lock-in period: Exiting early can trigger penalties up to 1.5% of your outstanding loan. Unless your new savings massively outweigh the fee, it’s not worth it.
You plan to sell soon: Refinancing involves upfront costs. If you intend to sell your home within the next two years, you may not recover those costs.
You’re stretching your tenure: Extending your loan term during a refinance might reduce monthly payments but increase total interest paid.
Your financial health has changed: Your eligibility will be reassessed. High debts, unstable income, or a drop in property value could lead to rejection.

In short, refinance home loan only when the timing, numbers, and your circumstances align.

Common Reasons Refinance Applications Get Denied

Not every mortgage loan refinance application gets approved. When you apply, the bank treats it like a brand-new loan application. That means they’ll scrutinise your:

Credit score and debt-to-income ratio
Property valuation
Employment and income status
Loan quantum in relation to age and tenure

Some red flags that might get your application rejected:

You’ve taken on too much debt recently
The value of your home has dropped, leading to a high loan-to-value (LTV) ratio
You want a longer tenure that exceeds the maximum allowed based on your age
Your paperwork is incomplete or inconsistent

Tip: Before refinancing, reduce debts and stabilise income to improve your odds.

What About Equity—Do You Lose It?

A common question is whether refinancing affects the equity in your home. The answer depends on the type of refinancing.

If you’re simply switching to a lower-interest loan, your equity remains intact. In fact, lower interest means more of your payments go toward the principal, helping you build equity faster.

However, if you go for a cash-out refinance, where you borrow more than you owe, then yes—your equity decreases. You’re pulling out part of your property’s value as cash, effectively increasing your loan balance.

Equity = Property’s market value – Outstanding loan

A higher equity ratio is better, and most packages for refinancing home loan in Singapore require your LTV to be below 75%.

Repricing vs Refinancing: Know the Difference

Before you leap into refinancing mortgage, see if your current bank offers repricing. Repricing means switching to another loan package within the same bank. It’s often cheaper and quicker than refinancing.

Why banks may not promote this? Because they earn more from customers who stick with higher rates post-lock-in. So, do your homework:

Ask your current lender for repricing offers
Compare them with competitor refinancing packages
Don’t be afraid to switch banks if the deal is better

Remember: loyalty doesn’t pay in this game.

SORA and Market Trends: Stay Alert

Singapore is shifting toward SORA-based rates for home loans. These floating-rate benchmarks are influenced by macroeconomic factors and are replacing older standards like SIBOR and SOR.

SORA is more transparent but also more volatile. This adds an extra layer of complexity to refinance home loan rates. With rates expected to fluctuate in 2025, it’s crucial to assess your ability to handle rate increases before signing up for a floating-rate loan.

Also, take note of notice periods—most banks require up to 3 months’ notice for refinancing. Planning ahead ensures you don’t end up trapped with higher rates when you could’ve switched.

Steps to a Successful Refinance

Here’s how to ace the process:

Mark your lock-in expiry date. Start your search at least 6 months in advance.
Compare packages. Focus on rates, lock-in periods, legal subsidies, and hidden fees.
Get your finances in order. Avoid taking big loans before approval.
Evaluate repricing. Always ask your current bank what they can offer before moving.
Check costs vs savings. Only proceed if the numbers justify it.

Following these steps will ensure that your refinancing mortgage journey is a rewarding one.

Final Thoughts

Knowing when to refinance mortgage is part science, part timing, and part self-awareness. Refinancing is more than just chasing a lower rate—it’s about aligning your financial goals, loan conditions, and market trends to make a strategic move.

Whether you’re aiming to cut monthly costs, pay off your loan faster, or unlock equity, the best time to refinance your home loan in Singapore is when preparation meets opportunity. Act too late, and you risk locking yourself into less favourable terms. Act too soon, and you may incur avoidable penalties.

Evaluate carefully, plan ahead, and never underestimate the power of refinancing done right.

Author Bio:

Paul Grewal is a seasoned home mortgage consultant based in Singapore, renowned for his strategic finesse and deep market insights. With over a decade of experience, he specialises in helping clients navigate the complexities of property investment and refinancing home loans. Paul’s approach is highly personalised, ensuring that his clients secure the best possible terms and mortgage loan interest rates in Singapore tailored to their unique financial situations. An avid writer, he contributes regularly to leading financial publications, offering advice on smart property investment and financial planning. His workshops on financial literacy are highly sought after, reflecting his commitment to empowering homeowners in Singapore. The blog deals with the best time to refinance your home loan in Singapore, guiding homeowners on how to time their refinance smartly, reduce long-term interest costs, and navigate refinancing pitfalls using key strategies and benchmarks.