How does refinancing a mortgage work?

Rates and thresholds change. The current figures are kept in one place: the Singapore property rules reference.

Homeowners sometimes let a loan quietly roll onto a bank's default rate after the lock in period ends, without realising that rate is often meaningfully less competitive than what a fresh application, at the same bank or elsewhere, could secure.

Why homeowners refinance

Most home loans carry an attractive rate only for an initial lock in period, commonly two to three years, after which the rate typically reverts to a less competitive package unless you act. Refinancing lets you exit that ageing rate and move onto a new bank's current best offer, which is often materially cheaper than what your existing bank continues to charge on an expired package. Some owners also refinance to change their loan structure, switching between fixed and floating rate packages, or to draw out additional equity through a cash out refinance, subject to the prevailing LTV limit.

The mechanics of switching banks

Refinancing involves applying to a new bank for a fresh home loan sized to redeem your existing outstanding balance, undergoing the new bank's credit assessment against current TDSR rules, and engaging a lawyer to handle the discharge of the old mortgage and the registration of the new one. The new bank typically commissions its own valuation of your property. Once approved and the paperwork completes, the new bank disburses funds to redeem your old loan in full, and your monthly instalments then run under the new package.

What it costs to refinance

Expect to pay legal fees for setting up the new mortgage and a valuation fee, though many banks offer a legal fee subsidy or a cash rebate to attract refinancing customers, which can offset some or all of this cost. If you are still within your existing loan's lock in period, you will also typically face an early redemption penalty from your current bank, commonly a percentage of the outstanding loan amount, which needs to be weighed against the interest savings from switching.

Timing the switch

The most common trigger point is the end of your existing lock in period, since redeeming the loan before then usually incurs the early redemption penalty on top of the normal switching costs. It is worth starting the comparison process a few months ahead of your lock in expiry, since a new loan application, valuation, and legal process take time, and you want the new package ready to take over seamlessly rather than reverting to the old bank's default rate even briefly.

Refinancing vs repricing

Repricing is a related but distinct option: instead of switching banks, you ask your existing bank for a new rate package on the same loan, usually with lower or no legal cost and a faster process than a full refinance, since there is no new lender, no discharge, and often no fresh valuation required. The trade off is that your existing bank's repricing offer may not be as sharp as what a competing bank offers to win a full refinance, so it is worth comparing both routes rather than assuming either is automatically better.

Frequently asked questions

What is the difference between refinancing and repricing?

Refinancing moves your loan to a new bank, involving legal work and a new valuation. Repricing switches you onto a different rate package with your existing bank, usually faster and with lower or no legal cost, but the rate on offer may not be as competitive as what a new bank offers to win your business.

Can I refinance before my lock in period ends?

You can, but you will typically pay an early redemption penalty set out in your existing loan agreement, commonly a percentage of the outstanding loan amount. Whether this makes sense depends on comparing the penalty cost against the savings from switching earlier.

How much does refinancing typically cost?

Costs generally include legal fees for the new mortgage and a valuation report, though some banks offer subsidies or waive certain fees to attract refinancing customers. Ask each bank for their current subsidy terms and weigh the net cost against your projected interest savings.

Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Rates and rules reflect the position as at 9 Aug 2026; verify current figures with IRAS, HDB, or MAS before making any decision.