Is it a good time refinance from HDB Loan to Bank Loan?

Hi WL,

Yup. Interest rates are dropping rapidly and you might want to consider refinancing. If you are able to maintain the same payment amount, you might be able to shorten the payment duration by a few years, which will help you save a fair bit.

E.g., a $400K HDB loan @ 2.6% over 25 years is $1814/mth or $544K in total.

Refinancing to a $400K bank loan at 1.6%, maintaining the ~$1814/mth repayment, will lead to a monthly payment of $1798/mth but a repayment period of 22 years, or $474K total. That's a pretty significant saving.

The downside is that for fixed rate loans, they will eventually become floating rate loans down the road, and we won't know what the interest rates will be then. If you take floating rate loan, they fluctuate pretty regularly. HDB loans have been pretty much OA interest + 0.1% for the longest time now, which allows you a certain predictability in your monthly outflows. However, the cost savings now are significant. You won't be able to refinance back to a HDB loan once you go for a bank loan however.

Given that banks are dropping their rates to 1.5% for Max 5 years. I think its a really good catch, considering HDB charges 2.6%.