When is the right time to refinance my home loan?
The right time to refinance is typically when your lock-in period expires, when market rates are at least 0.5%–0.7% lower than your current rate, or when your financial circumstances have improved. You should start comparing options three to six months before your lock-in ends, as refinancing takes 8 to 13 weeks. Always weigh potential interest savings against costs like legal fees, valuation fees, and any clawback of bank subsidies.
Last updated: 8 May 2026
Timing your refinancing decision well can save you tens of thousands of dollars over the life of your mortgage. While there is no single perfect moment to refinance, several indicators suggest it may be the right time.
The most common trigger is the expiry of your lock-in period. Most mortgage packages have a lock-in period of two to three years, during which refinancing incurs a penalty (commonly 1.5% of the outstanding loan). Once this period ends, you are free to switch without additional costs. Ideally, you should start comparing options three to six months before the lock-in expires to ensure a seamless transition, as the refinancing process typically takes 8 to 13 weeks to complete.
A significant drop in market interest rates relative to your current rate is another strong indicator. If your existing rate is substantially higher than what is currently available, the interest savings from refinancing could be significant. A general rule of thumb is that refinancing becomes worthwhile when the new rate is at least 0.5% to 0.7% lower than your current rate, though the exact threshold depends on your outstanding loan amount and remaining tenure.
Changes in your financial circumstances may also warrant refinancing. If your income has increased, your debts have decreased, or your credit score has improved, you may qualify for better terms than when you first took out your mortgage.
If your current loan is on a floating rate that has risen substantially, refinancing to a fixed-rate package could provide payment stability. Conversely, if you are on a fixed rate and market rates have dropped, switching to a floating rate could reduce your costs.
The costs of refinancing should always be weighed against the potential savings. These include legal fees (typically S$2,000 to S$3,000, though often subsidised by the new bank for loans above S$300,000 to S$450,000), valuation fees (S$200 to S$500), and any early repayment penalty if you are still within the lock-in period. Many banks also have cash rebate clawback periods of around three years, meaning you may need to return subsidies if you refinance before this period ends.
A common mistake is inertia - many homeowners continue paying higher rates simply because they do not actively monitor the market. Cashew solves this by tracking your loan terms against prevailing market rates and notifying you when a better option is available, ensuring you never overpay unnecessarily.