If you locked in a mortgage during the 2022 to 2024 rate spike, you are likely still paying 3.5% or more. Rates have since fallen, and the gap is now large enough that refinancing is the single highest-impact money move available to most Singapore homeowners.
The math on an S$800k loan
Start with the numbers, because they settle the question quickly.
On an S$800,000 loan over 25 years, a 3.5% rate costs roughly S$4,000 a month. Today's fixed rates sit around 1.5%, which brings the same loan to roughly S$3,200 a month. That is about S$800 saved every month.
Over a two-year lock-in, gross saving is close to S$19,200. Legal and valuation fees for refinancing run around S$2,500, but most banks will cover these costs when the loan amount is above S$250,000 to S$300,000. For the majority of Singapore borrowers, the net saving lands close to the full S$19,200. The exact figure depends on your outstanding balance and remaining tenure, but the shape holds: two percentage points on a large loan is real money.
Where are rates now? SORA-linked packages are quoted around 1% to 1.2%, and fixed packages (1Y, 2Y, 3Y) around 1.4% to 1.6% in this environment. SORA is the Singapore Overnight Rate Average, the benchmark that has replaced SIBOR for floating-rate loans. A floating package tracks it plus a bank spread; a fixed package holds your rate steady for the lock-in period.
The choice between them is a separate decision. What matters first is that both are well below 3.5%, so almost anyone on an old package benefits from moving.
Time it before your lock-in ends
Refinancing has a lead time most people underestimate. Bank processing typically takes 60 to 90 days, so you should start three to four months before your current lock-in expires.
Miss the window and you pay the early redemption penalty, which is usually 1.5% of the outstanding loan. On S$800,000, that is S$12,000, enough to erase most of a year's saving. Start too late and you also risk drifting onto your bank's reversion rate, which is often the least competitive rate they offer.
Check your loan agreement for the exact lock-in end date, then work backwards. Four months of runway gives you room to compare packages, submit documents, and complete the legal transfer without pressure.
Clear the TDSR stress test first
Before any bank approves a new package, you have to pass the Total Debt Servicing Ratio (TDSR) test. This is a MAS rule, and it can catch people out.
TDSR caps your total monthly debt obligations at 55% of gross monthly income. The catch is that the bank does not assess you at 1.5%. It stress-tests your repayment at a medium-term interest rate of 4.0%, well above the rate you will actually pay. This is deliberate: it checks you could still service the loan if rates rose.
So run your own numbers at 4.0% across all your debts, not just the mortgage. Car loans, personal loans, and credit card balances all count. If your income has dropped or your other debts have grown since you first borrowed, you may find the new package harder to secure than expected. Better to know now than to apply and be declined.
The sequence, in order
- Find your lock-in end date and count back four months. That is your start line.
- Check the early redemption penalty on your current loan so you do not move too early.
- Run your TDSR at 4.0% across all debts to confirm you will qualify.
- Compare fixed and SORA-linked packages from other banks, using a broker to negotiate fee waivers and confirm whether the new bank will cover your legal and valuation costs.
- Submit early enough to complete within the 60 to 90 day processing window.
The saving is straightforward to capture. The only way to lose it is to move at the wrong time, or to accept the first offer put in front of you.
Sarah Chen
