Home Loan Refinancing Formula Explained, With Examples
Every home loan refinancing result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
Saving = PMT(current rate) − PMT(new rate); breakeven = switching costs ÷ monthly saving.
What each input means
- Outstanding loan (S$): the value you enter in the calculator.
- Current rate (%): the value you enter in the calculator.
- New rate (%): the value you enter in the calculator.
- Remaining tenure (years): the value you enter in the calculator.
- Switching costs (S$): the value you enter in the calculator.
Example
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$280.02
- Months to recover costs: 10.71 months
How the result changes
The table keeps the other inputs at their example values and changes outstanding loan (s$).
| Outstanding loan (S$) | Current instalment | New instalment | Monthly saving | Months to recover costs |
|---|---|---|---|---|
| 600,000 | S$3,356.97 | S$3,076.95 | S$280.02 | 10.71 months |
| 300,000 | S$1,678.49 | S$1,538.48 | S$140.01 | 21.43 months |
| 450,000 | S$2,517.73 | S$2,307.72 | S$210.01 | 14.28 months |
| 750,000 | S$4,196.21 | S$3,846.19 | S$350.02 | 8.57 months |
| 900,000 | S$5,035.46 | S$4,615.43 | S$420.03 | 7.14 months |
Why it matters
Property is the largest purchase most Singaporeans make, and stamp duties, loan limits and cash requirements are front-loaded. Small mistakes in these figures can mean a shortfall at completion, so it pays to run the numbers before you commit to an option to purchase.
Stamp duties are paid upfront. Buyer's Stamp Duty applies to every purchase at tiered rates up to 6%, while ABSD depends on the buyer's residency status and how many residential properties they already own. Sellers who dispose of a property within the holding period pay Seller's Stamp Duty.
Most Singaporeans live in HDB flats, which can be financed with an HDB concessionary loan at 0.1% above the CPF Ordinary Account rate or with a bank loan. Private property must be financed with a bank loan, and banks offer fixed, floating and SORA-pegged packages.
Beyond the price, buyers should budget for legal fees, valuation, home insurance, renovation and furnishing. Running the figures in advance helps you decide how much cash to hold back and whether a smaller loan or longer tenure makes more sense.
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.
Use the Home Loan Refinancing Calculator to plug in your own numbers.
Run your own numbers: Home Loan Refinancing Calculator