For the last 1 week, banks are withdrawing freebies/benefits which normally come with a housing loan package. A move prompted by MAS which is suspected to be control measures to tighten up the property market a little but which has been implemented in a subtle manner through the banks, without much publicity.

On 5 Oct 2012 Friday late evening, MAS announced yet another tightening measures on the property market. This time is on the loan tenor limit.

Banks have recently removed freebies that are normally offered to Housing Loan customers (for both HDB and private residential properties). These benefits include legal subsidies, valuation subsidies and free fire insurance for first year. Under the MAS guidelines, these benefits are considered cash rebates and should be deducted from the purchase price before arriving at the loan amount. This is similar to discounts or rebates for stamp duty, furniture and renovation offered by developers, which are to be deducted from the purchase price first before arriving on the loan amount.

Planning to refinance home loan or HDB housing loan? This Refinance Home Loan Guide covers every aspect of refinancing and can be a handy reference for home loan borrowers in Singapore.

For the past one year, housing loan interest rate has come down from its peak. Home loan interest rate reached a high of over 4% back in early 2024 and by end 2025 it has fallen below 2%. The interest rate downturn is a great relief for all home owners and property investors who are still diligently repaying their property loans.

For those who have taken up HDB housing loan with concessionary rate of 2.6%, by refinancing your HDB loan to a bank loan, you can immediately enjoy more interest savings for the next few years. (Note that once a HDB loan is switched to bank loan, it cannot be reversed back to HDB loan.)

So, it could be your time to act now. Here's everything you need to know before you start your Refinancing journey.

How much can I Save by Refinancing?

Let’s look at a $500,000 home loan over a 25-year loan tenor. For example, by reducing interest rate by 1%, the total interests you can save amount to $9,784 in the next 2 years and $14,498 in the next 3 years. Monthly instalment can be lowered by $245. This is summarised in the Table A below. The savings are definitely worth the effort.

Table A - $500K Loan over 25 Years

Bank Loan Refinancing vs Repricing?

While Refinancing is the transfer of a property loan to another bank with a more competitive offer, Repricing involves the conversion of your current loan package to a new package offered by your existing bank.

The Repricing process may be easier and it takes a month for the new rate to take effect. However, repricing rate may not be as competitive when compared with other banks. Therefore, it is wiser to compare the packages offered by different banks in the market. The most convenient and reliable way is to get the help of a mortgage broker who can help compare your options and assist you through the process if you opt to refinance your loan.

What are the Costs of Refinancing?

You will incur legal fee as bank requires you to appoint a conveyancing law firm to assist in the refinancing process.

The other cost is valuation fee, which is as charged by the bank. Bank will assign their valuer to do on-site valuation to confirm the property value.

Typically, the total refinancing cost for a condo ranges from S$2,000 to S$2,300. For a HDB flat, the total refinancing cost is around S$1,800.

Banks are offering legal subsidies or cash rebates to cover the refinancing cost to entice borrowers to refinance. This is typically offered for bank loan of minimum $500K for private properties and minimum $250K / $300K for HDB flats. All banks’ subsidies or cash rebates usually come with a 3-year clawback condition. As long as the loan stays with the bank for minimum 3 years, no refund of the subsidies or cash rebates is required.

What are the Types of Interest Rates available for Refinancing?

Banks offer a variety of loan packages catering for different needs. There are 2 main categories: Fixed Rate and Floating Rate packages. The most common fixed rate packages are 2 years and 3 years fixed rate. After the fixed rate term expires, the loan will be on floating rate till loan maturity. As for floating rate packages, the most common package is pegged to 1-month Compounded SORA and 3-month Compounded SORA.

The first thing to decide is whether to go for fixed rate or floating rate. Fixed rate gives borrowers peace of mind as the monthly instalment is predetermined for the next 2 to 3 years. Depending on the interest rate outlook, some borrowers may prefer floating rate to take advantage of interest rate downcycle.

How to Compare Refinance Home Loan Rates Meaningfully?

When considering your refinancing options, what matters is how much interests you get to save in the next few years and whether it is worthwhile to refinance. The interest savings for the next few years have to be significant enough, even after factoring in the refinancing cost.

Example, for a private property loan that is below $300K, the interest savings may not be big enough to cover the refinancing cost, therefore will be better off to reprice with existing bank. 

Besides presenting to you the most competitive refinancing packages, a good mortgage broker will help you with the analysis so that you can make an informed decision.

What else to consider besides Comparing Interest Rates?

When considering your next loan package, it is a good time to review your plan for the property and the housing loan. For example, whether there is a possibility of selling your property or paying down the principal in the near future. Let your mortgage broker know about your plan so that he/she can recommend and highlight suitable loan packages that can best meet your requirement.

If you are planning to make lumpsum prepayment, this may be a good time to do so before you start on a new package, especially so, if the new package comes with prepayment penalty.

When you refinance home loan, it is also an opportunity to review your monthly instalment and loan maturity. Banks allow you to adjust loan tenure subject to their approval.

What is the Difference between Refinancing Own-stay Property and Investment Property?

All refinancing loans are subject to banks’ internal credit assessment criteria. Mortgage property that is owner-occupied has less stringent loan assessment criteria as compared to investment property. For investment property, borrowers can choose to commit to a debt reduction plan with a repayment of minimum 3% of outstanding loan over a period of up to 3 years and waive TDSR requirement, or to meet the 55% TDSR requirement (refer to MAS Refinancing Rules for Housing Loans),

What are the Reasons to Refinance Home Loan?

The most common reason to refinance home loan is to lower your interest cost. By lowering your interest rate, your loan principal will also reduce at a faster rate.

Besides this, some may want to get additional loan for personal use or investment purpose. This is called Equity Term Loan which is only applicable for private properties.

Others may prefer to refinance to another bank as they prefer certain features/benefits that their existing bank is not able to provide.

When can I Refinance my Housing Loan?

Before you jump straight into it, you have to check if your loan is ready for the move.

Check if your loan is still within the lock-in period. If so, you need to know exactly when the lock-in period will expire.

To avoid heavy penalty fee, refinance home loan must be timed such that the redemption happens after the lock-in expiry date.

Another important thing to know is existing bank requires 2 months’ advanced notice period for full redemption of loan. This means you can start exploring your refinancing options around 3 to 4 months before the lock-in expiry date. This should give you sufficient time to review and to get your refinancing loan approved.

For condo that is under construction or recently attained TOP, there is bank loan still pending drawdown. Existing bank will charge cancellation fee on the undisbursed loan if you refinance the loan at this point. To avoid paying cancellation fee, you can either reprice with existing bank or wait till the loan is fully drawn down before refinancing.

As for HDB loan, there is no lock-in period. Borrowers may refinance their HDB loan to bank loan any time after loan is disbursed. It will take about 2 months for the loan to be transferred to the refinancing bank.

Step-by-Step Refinance Home Loan Process

1. Compare the Refinancing options.
2. Apply for Bank Loan.
3. Bank approves the loan and issues Letter of Offer for borrower's acceptance.
4. Appointment of a conveyancing law firm that is in bank's panel.
5. Law firm serves 2 months' advanced notice to existing financier.
6. Bank valuer arranges for on-site valuation.
7. Law firm advises and manages the process till completion.
8. Borrower signs mortgage documents at lawyer officer.
9. Bank advises on account opening and inform borrower about loan repayment.

What's Next after Refinancing?

Your loan will be locked in for a period of time, depending on the commitment period of your current loan contract. Do keep a record of the date of completion of the refinancing as this is the start date of the lock-in period.

Interest rate is usually higher after the initial 2 to 3-year term depending on your loan package. Banks do not normally remind borrowers when their lock-in period is expiring. Taking a proactive approach to keep track and review your loan periodically will ensure you are timely in refinancing or repricing your home loan and thus avoid paying higher interests to the bank.

Time to Refinance your Loan? Yes, let's start the refinancing process now!

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When planning to buy a condo, potential buyers will first mull over the pros and cons of buying a new one from developer or from resale market. Here are some useful insights about New Condo vs Resale Condo.

Newly launched condo is appealing to buyers who are not in a hurry to move in and prefer brand new property requiring minimal or no renovation.

Buyers who need immediate occupation especially after selling their existing properties, tend to go for resale properties at their preferred location.

Although older properties are generally more affordable and tends to be bigger, buyers have to take into account the cost of renovating the unit and the higher maintenance fee.

If the property is for investment, investor can go for resale property with existing tenancy and collect rent immediately to help cover the mortgage loan instalments.

What you need to know when financing a New Condo vs Resale Condo

Upfront Deposit and Timing of Downpayment

For newly launched condo, upon confirmation of the unit, the developer will collect a booking fee equivalent to 5% of purchase price from buyer and issue the Option to Purchase to the buyer.

Around 1 to 2 weeks later, buyer/buyer’s lawyer will receive the Sales & Purchase Agreement from the developer.

Within 3 weeks from receipt of the Sales & Purchase Agreement, buyer is required to exercise the Option to Purchase witnessed by a lawyer.

With this, buyer will make further downpayment equivalent to 15% of purchase price within 8 weeks after the date of the Option to Purchase.

The remaining downpayment is progressively paid upon request by developer during the construction period after each stage of completion. Construction period is on average about 3-4 years.

For project that is close to obtaining Temporary Occupation Permit (TOP), buyer is expected to fork out more downpayment within 8 weeks after Option date.

For resale condo, buyer will pay option money, typically at 1% of purchase price to seller in exchange for the Option to Purchase signed by seller.

Within 14 days after date of Option to Purchase, buyer is required to exercise the Option and make further payment at 4% of purchase price.

Payment of the remaining downpayment is made on completion date, normally 8 to 12 weeks after exercise date, or other timing as agreed between buyer and seller.

Bank Loan and Monthly Instalment

If the purchase of the newly launched condo involves bank financing, the loan will only be released after the downpayment are settled.

Instalment payment will start right after first loan disbursement. This means the monthly instalment will be a relatively small amount initially and will increase over time as more loan are drawn down.

In the case where buyer is obtaining minimal loan, the loan will not be released so soon, thereby allowing buyer more time to plan the cashflow as the remaining downpayments are gradually payout over 2 to 3 years. 

For resale property, the whole loan amount is disbursed in one lump sum on completion date. Thereafter, instalment is payable based on the loan amount.

Learn more about Maximum Loan Quantum for condo.

To confirm your maximum loan eligibility, Apply for In Principle Approval now.

Types of Home Loan Packages for New Condo vs Resale Condo

In the case where property is under construction, generally banks offer home loan packages that are on floating basis only, either pegged to SORA or Fixed Deposit Rate or Bank’s Board Rate. Interest rate will commence on first loan disbursement.

Packages normally do not have any lock in period and come with free conversion, which allows switching to another loan package within the same bank at no charge.

Fixed rate packages are only eligible for properties that are completed or those that have obtained Temporary Occupation Permit (TOP).

There are wider selections of home loan packages for completed properties as it comprises fixed rate as well as floating rate packages (that are pegged to SORA or Fixed Deposit Rate or Bank’s Board Rate).

Packages usually come with lock in period of at least 1 to 2 years, which may have restrictions on early lumpsum partial and full repayment of the loan.

Refinancing of Mortgage Loan

For condos that are under construction, borrowers generally refrain from refinancing their loan before obtaining TOP. This is because existing bank will charge a cancellation fee on the undisbursed loan. This can be a hefty sum to pay if the property is at the initial construction stage where majority of the loan is not disbursed yet.

After a condo has reached TOP, there is a last portion of loan that will only draw down within one year. At this point, refinancing may be considered as most of the loan is drawn down and the cancellation fee is relatively lower.

On the other hand, for resale properties, cancellation fee is not a concern as the loan is fully disbursed on completion date. Borrowers can consider refinancing their loan as long as the loan is out of lock-in period to avoid penalty.

Planning to buy a Property? Partner us to take care of your Home Loan. Check out Our Services.

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