Home Loan Refinancing in Singapore: 5 Mistakes to Avoid
Compares your current mortgage with a new rate to show the monthly saving and how long switching costs take to recover. The maths is not complicated, but a handful of errors come up again and again in this and related property & hdb calculations. Here is what to watch for.
Singapore's property market is shaped by cooling measures introduced since 2009, including Additional Buyer's Stamp Duty, loan-to-value limits and debt servicing ratios. These rules are adjusted when the market runs hot, so the numbers you see today may differ from what friends paid a few years ago.
The Total Debt Servicing Ratio limits monthly debt repayments to 55% of gross monthly income for any property loan, and the Mortgage Servicing Ratio limits the housing instalment to 30% of income for HDB flats and new executive condominiums. Banks apply a medium-term interest rate in these tests rather than the rate you will actually pay.
1. Using the advertised interest rate for affordability
Banks apply a stress-test rate to TDSR and MSR calculations.
2. Overlooking other costs
Legal fees, valuation, fire insurance, renovation and agent fees all add to the total outlay.
3. Forgetting ABSD on a second property
Citizens pay 20% ABSD on a second residential property, which can be hundreds of thousands of dollars.
4. Using the price instead of the higher valuation
Stamp duty is charged on the higher of price or market value.
5. Assuming the bank will lend 75%
LTV falls to 45% for a second loan and is reduced further for long tenures or older borrowers.
The correct method
Saving = PMT(current rate) − PMT(new rate); breakeven = switching costs ÷ monthly saving.
For example, with these inputs:
- Outstanding loan (S$): 600,000
- Current rate (%): 3.8
- New rate (%): 2.9
- Remaining tenure (years): 22
- Switching costs (S$): 3,000
the calculator returns:
- Current instalment: S$3,356.97
- New instalment: S$3,076.95
- Monthly saving: S$280.02
- Months to recover costs: 10.71 months
Related calculations
- Property Downpayment Calculator: Splits the downpayment into cash and CPF and shows the remaining loan.
- Buyer's Stamp Duty (BSD) Calculator: Calculates Buyer's Stamp Duty on a Singapore residential property using the tiered rates from 1% to 6%.
- Additional Buyer's Stamp Duty (ABSD) Calculator: Calculates ABSD by buyer profile and the number of residential properties owned, using the rates in force since 27 April 2023.
- Total Property Stamp Duty Calculator: Adds BSD and ABSD together so you know the full stamp duty bill before you sign an option to purchase.
The Home Loan Refinancing Calculator applies the formula consistently, so it is a quick way to double-check your own working.
Run your own numbers: Home Loan Refinancing Calculator