Refinancing HDB loan

DISCLAIMER: I represent Mortgage Master, a home loans platform

Currently (and for over a decade) bank loan interest rates have been below the HDB loan interest rate of 2.6%. So on the surface, it would definitely be a good idea to refinance to a bank loan, where interest rates are currently as low as 1.3% for a fixed rate, and below 1.2% for a floating rate (for a HDB property with an outstanding loan amount of about $200k).

That being said, do take note of the following:

1) Once you refinance to a bank loan, you cannot return to an HDB loan

2) No fixed rate packages are fixed for more than 5 years - 2 and 3 year fixed packages are the norm. After that fixed rate packages revert to floating rate packages.

3) Some banks will not let you refinance when your outstanding loan amount is below $200k. This means that you will have significanty less options when your lock-in period is up.

Depending on your outstanding loan amount, the bank may be willing to subsidise part of all of the refinancing costs. However, just be ready to pay about $2k to $2.5k for legal and valuation fees.

All that being said, in most cases refinancing is able to help you save money in the long run (especially since you're refinancing from an HDB loan!). A good mortgage consultant would be able to help you do the calculations and determine if it makes sense to pay the upfront costs and save more in the long run.

Hope this helps! :)

When you refinance your loan to a bank loan, the most attractive part is that your interest will be lower. However, I believe that banks will have a minimum loan amount to loan and you may not be able to refinance in future (at a good rate) if your loan amount is too low.

Usually, the banks "may" absorb the cost of the refinancing. That will depend on your relationship with the bank and also the loan amount. Hope that helps.