In March 2022, the US Federal Reserve raised interest rates for the first time since 2018. Subsequently, it projects six more interest rate increases in 2022. What does this mean for Singaporeans? Well, homeowners can expect to pay more interest on their mortgage in 2022 and beyond.
Don’t worry though, this is where refinancing can come in handy. If you’re thinking of searching up “What is home loan refinancing” on Google, chances are that you’re not quite sure where to begin or what to expect during the refinancing process.
Maybe you’re wondering whether home loan refinancing is even worth the time and effort. We’re here to help! Learn all about home loan refinancing with this step-by-step refinancing checklist.
Interest rates are set to rise in 2022, so act now! Refinance your home loan to secure record low mortgage rates while you still can.
Check out SmartRefi to track your mortgage against daily rates and be notified of the best times to refinance, or speak to PropertyGuru Finance mortgage experts for unbiased advice and recommendations.
1. Check That Your Lock-in Period Is Over Before Embarking on the Home Loan Refinancing Process
Most home loans come with a lock-in period. In other words, once you accept the home loan, you’ll be ‘locked-in’ and won’t have the option to switch to a better rate without incurring a pre-payment penalty. So, if you’d like to refinance, the first thing to do is to check whether your lock-in period has already expired.
If your lock-in period has passed, you can move on to the next step in this checklist. If it hasn’t, make a note of the expiration date and only consider refinancing after the lock-in period to avoid penalty fees.
Related article: Refinancing Your Home Loan: 3 Reasons Why Lock-In Periods Aren’t Always Bad
2. Do the Math and Make Sure Home Loan Refinancing Will Save You Money
Refinancing your home loan in Singapore makes sense only if you’re getting a lower interest rate and saving more money over the entire course of the home loan.
For example, you could adjust the duration of your home loan by extending your loan term. While this would reduce your monthly payment in the short term, it could lead to you paying more interest over the duration of the entire loan.
Not sure whether refinancing is the right decision? Use PropertyGuru’s home loan refinancing calculator to estimate how much you could save by refinancing your home loan in Singapore.
3. Don’t Forget to Factor in Home Loan Refinancing Costs
Refinancing your home loan comes with costs such as the legal fee and valuation fee, which can add up to $3,000.
The good news is that these costs are usually subsidised by the bank. However, if your bank won’t cover these refinancing costs, you’ll need to pay for them upfront. Better make sure you can afford it before you commit to refinancing.
4. Read the Fine Print, and Then Read It Again
Just like every other financial product, home loans also come with fine print.
For example, your current home loan might come with a 3-year clawback clause stating that if you refinance during the clawback period, you will need to pay back any subsidies the bank previously gave you. This clawback period is separate from the lock-in period, so even if you are no longer under the lock-in period, the clawback provision might still be active. It’s wise to double-check.
You’ll also want to look out for the undisbursed loan amount. Did you know that 15% of the loan amount is held back from the developer until a Title Deed is issued for the property? If you decide to refinance before the bank has paid the developer in full, you’ll need to pay 15% towards the undisbursed loan. In addition, the undisbursed loan comes with a 0.75% to 1.5% cancellation fee.
Apart from fees highlighted in the fine print, be sure to check whether you qualify for cashback or any valuation subsidies.
Related article: Housing Loans Guide: “Chim” Mortgage Jargon, Compiled and Explained for Beginners
5. Do Your Research and Compare Home Loan Refinancing Packages
You wouldn’t buy the first apartment you view, so why should any refinancing home loan package be any different? Shop around and compare your options to make sure you’re getting the most suitable package for your home financing needs.
To save you time, you can use PropertyGuru’s refinance comparison tool. As a general rule of thumb, the process of refinancing can take up to five months. This gives you 3 to 4 months (prior to the expiration of your lock-in period) to do your research and find the best home loan package.
You can manually compare the best mortgage rates from DBS, Citibank, CIMB, Bank of China (BOC), Hong Leong Finance and more. You can also take this opportunity to know more about DBS home loan refinancing packages, the UOB home loan refinance process as well as the OCBC home loan refinance process and more.
Alternatively, if you’re unsure of when is the right time to refinance your home loan or how to compare interest rates, use our SmartRefi tool:
Aside from tracking your existing mortgage and comparing it against the latest interest rates of applicable loan packages, SmartRefi will notify you whenever it finds suitable home loan refinancing recommendations.
If you prefer more tailored financial advice, reach out to one of our friendly Mortgage Experts for help – all for free!
6. Prepare All the Required Documents for Home Loan Refinancing
The entire process of refinancing is now digital. The moment you apply for a home loan package online, you’ll be expected to submit documents before your application can be processed.
To be approved for refinancing, you’ll need to show financial stability. Some of the documents you’ll need to submit as part of your application will include IRAS tax returns and a CPF contribution statement.
Here is a more detailed list of the documents you’ll need for your refinance application, and how to extract them.
Documents to Prepare When Refinancing Your Home Loan
1. HDB Flat Information (For HDB Flat Owners Only)
To refinance your HDB flat, you will need information about the flat as well as your current financial situation. The flat information includes details of when you purchased your HDB, the purchase price and your flat’s occupiers. The financial information contains information about your account balance on your mortgage loan, whether that’s from HDB or from another financial institution.
To access this information:
- Login to MyHDBPage via SingPass
- Select ‘My Flat’ on the menu
- Choose ‘Purchased Flat’
- Click ‘Financial Info’ and ‘Flat Details’ to download a copy
2. IRAS My Property Tax information
When you refinance your home loan, the financial institution will want to know whether the property is owner-occupied for the purpose of Total Debt Servicing Ratio (TDSR) exemption. If the property is occupied by the owner, TDSR requirements become less stringent. That’s why you need to download the information from your IRAS MyTax portal as one of the documents for submission to the financial institution.
To download the My Property Tax Page:
- Login into the IRAS MyTax portal
- Select the ‘Property’ tab
- Click ‘View Property Portfolio’
- View and download the details of your property portfolio
3. Latest IRAS Notice Of Assessment (NOA)
In order to extend a home loan to you, the financial institution needs to know whether you have the financial capability of repaying the loan. The financial institution uses your income as a gauge of your financial capability of repayment. This is why you also need to submit your latest IRAS notice of assessment when you are applying to refinance. The Notice of Assessment contains your annual income for the latest financial year and how much tax you were subjected to.
To download your Notice of Assessment from IRAS:
- Login into the IRAS MyTax portal
- Select ‘Notice’ tab and then ‘Individual’
- Download the latest ‘Notice of Assessment’
4. CPF Contribution Statement for the Past 12 Months
Apart from your IRAS Notice of Assessment, you will also need to provide 12 months of CPF contribution statements.
To download 12 months of CPF contribution statements:
- Login to your CPF account via SingPass
- Under ‘Section B’, select ‘Contribution History’
- Choose 12 months as the period of contribution
- View and download the statements of CPF contribution
Thinking of getting a bank home loan? Compare the best mortgage rates on PropertyGuru Finance, or contact us for more personalised advice and recommendations:
Disclaimer: Information provided on this website is general in nature and does not constitute financial advice.
PropertyGuru will endeavour to update the website as needed. However, information can change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyGuru, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person.
More FAQs About Home Loan Refinancing Singapore
Can You Refinance Your Home Loan With the Same Bank?
No. This will be called repricing. Home loan refinancing is when you switch to another bank.
When Should I Refinance My HDB Loan?
You can refinance HDB loans any time, but most HDB homeowners refinance after 4 to 5 years. This is after they have paid off at least 25% of the property’s value/price so that they would not need to pay any more cash.
Is There Any Lock-In Period for HDB Loan?
Unlike bank loans, an HDB loan refinance do not have any lock-in period. You are free to redeem it or refinance your loan any time.
How Long Does It Take for An HDB Loan Refinance to Go Through?
How long HDB refinancing takes may depend on the volume of applications received by the bank, as well as their individual processing times. However, it generally takes 4 to 6 weeks to complete.
