Can I make partial or full early repayment on my home loan?

Most home loans in Singapore allow both partial and full early repayment, though the terms and potential penalties vary depending on your lender and loan package.

For HDB loans, early repayment is straightforward and flexible. You can make partial or full prepayments at any time without incurring any penalty. For partial prepayments, the minimum amount is $5,000 (in multiples of $1,000) if your loan commenced on or after 1 April 2012, or $500 if your loan commenced before 1 April 2012. This makes HDB loans particularly attractive for borrowers who receive lump-sum payments - such as bonuses, inheritance, or proceeds from asset sales - and want to reduce their outstanding balance.

For bank loans, the rules depend on whether you are within or outside the lock-in period. During the lock-in period, full early repayment - including refinancing to another bank - typically triggers a penalty of 0.75% to 1.5% of the outstanding loan amount. Partial prepayments during the lock-in period may also be subject to penalty depending on your specific loan package, and the terms vary between lenders. Minimum partial prepayment amounts also vary by bank: UOB requires $5,000 (in multiples of $1,000), OCBC requires $5,000 (in multiples of $1,000), and DBS requires $10,000 (in multiples of $1,000). Always review your loan agreement carefully before making any prepayment during the lock-in period.

Outside the lock-in period, most bank loans allow both partial and full prepayment without penalty. Some packages may require a minimum notice period of one to three months for full repayment, so it is worth confirming this with your lender in advance.

Making partial prepayments can significantly reduce your total interest cost and effective loan tenure. When you make a partial prepayment, the additional amount reduces the outstanding principal directly. Since interest is calculated on the outstanding principal, a lower balance means less interest accrues each month. You can typically choose to either maintain your current monthly instalment - which shortens the tenure - or reduce your monthly instalment while maintaining the original tenure.

A practical strategy is to direct windfall income - bonuses, tax refunds, or investment returns - toward partial prepayments, particularly in the early years of the loan when the outstanding principal is highest and the interest savings are most impactful.

Cashew's advisors can help you understand the prepayment terms of your existing loan and calculate the potential interest savings from making additional payments.