The natural tendency for all of us is to avoid unnecessary work and trouble. Perfectly understandable. That’s why you check around first before you will sign on the repricing offer quoted by your bank.  And that’s probably how you stumbled on this blog article. But is that always the best thing to do?

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First, for those new to mortgages, repricing refers to renegotiating your home loan package with your current lender when you are out of your lock-in period hence you “re-price” the loan, as opposed to refinancing the mortgage out to another bank.  As the loan stays within the same bank, there’s no need to engage a lawyer to redo the legal instruments and hence no legal nor valuation fees involved.  It’s the easiest in terms of effort, but as of all things in life, the easiest route may not always be the best or right choice.

The truth is there’s always another bank out there who wants your business more than your current bank and who would quote you either lower rates or better terms or both, to entice you over.  That’s the beauty of free market competition.  Those of us old enough to remember how much airfares or overseas trunk calls used to cost can certainly attest to the benefits of free market. With the advent of internet, free market competition coupled with digital revolution have been the key disinflationary forces this century driving productivity gains and keeping inflation muted for long periods up till 2022.

Before you decide what to do, in this article I like to debunk three myths when it comes to this perennial question which keeps coming up every two or three years whenever the lock-in period of your mortgage expires:

1. My mortgage broker has all the details of my loan and there’s no need to check with the bank.

That’s what some brokers will like you to believe. The truth is they are not so keen to let you call the bank for fear you will be quoted attractive or favourable rates so good that you simply reprice and which means there’s no business for them.

At MortgageWise, we take on a different view of things. Sometimes there’s really no need to move your loan elsewhere when your bank gives you a fair deal. We’ll let you know that.

We take this view because deep down we understand the true value add we must bring to you for this to be a sustainable business model for ourselves in the long run — we are in the business of helping people to compare rates, choose the right package (fixed or floating), and save precious time in that process. To deliver that, we need to build trust and credibility with all clients to do long-term business.

Hence, we need to call a spade a spade and be fair to repricing banks who many a time think that we brokers exist to take customers away from the banks come expiry of lock-ins. That’s old school thinking unfortunately. In this new internet era, businesses across all industries must compete well and prove their value in order to earn repeat business from clients. Those who sit on their laurels and expect existing customers to be always ignorant or lazy and simply sign on the dotted line each time might be in for some rude awakening. Consumers are smart and much more savvy than that.

2. If the interest rate quoted by my bank is not too different from what I see online, it’s probably easier to just reprice and save all the trouble.

There are a couple of problems with this thinking. First, what you see online may not be the true picture.

You would’ve thought that with the rise of generative A.I. and ChatGPT, it’s gonna make the job of hunting down the lowest mortgage rates all the more faster and easier. Unfortunately that’s not the case.

A.I. can only tell you what they can find online, but banks will never publish their best rates online for competitive reasons. In fact, more often than not, when you see much lower headline interest rates quoted at certain broker sites, they often turn out to be more gimmicks than real as you soon discover that there are conditions to fulfil or they are meant for outsized private property loans above $2 million for example. Not everyone has a debt this big since more likely than not, 80% of the enquiries we get are for loans below S$1 million. And not everyone has $200,000 cash to join as a priority banking customer of the bank.

Let’s supposed after finally getting past a few brokers and bankers and be somewhat confused by all the rates and terminologies used, you come to the conclusion that lowest headline rate you found (for your loan quantum) is just a tad lower than your own bank’s reprice quote by a mere 0.05%. Is that still worth all the trouble of changing bank? You reckoned probably not.

That’s the second problem — most people actually make their decision based on the lowest headline number they could get their hands on. Yet, from our 10 years of experience brokering mortgages in Singapore, what often makes the most impact in interest savings over the long term is not the interest rate you pay in the first year of the mortgage term, sometimes not even the second year.

When’s the last time you were held back from enjoying a lower mortgage rate because you were still in your lock-in period?  What most homeowners fail to realize is how “lock-in” is another form of price to pay, which can costs a lot more than the headline interest rate you thought you’re getting.  This is especially true in cycle-turning years for example during 2019-2020 and the latest 2023 to current.

The biggest factor which determines whether you save in the hundreds or in the tens of thousands over the next 3 to 5 years often has got to do with your choice of fixed versus floating rates, and that in turn is predicated on where do we lie currently in the interest rate cycle!

A third and final problem has got to do with the concept of total savings over time, somewhat like the idea of compounding returns. That 0.05% difference, or 0.10% over two years which is the typical lock-in period, may seem very little at $800 for an average loan of $800,000. But if you add all the peripheral benefits like excess cash rebate (subsidies given by banks) and gifts from brokers, it’s likely more than that.

Even if I just round this up to $1,000 for the typical loan, that’s how much you save in each refinancing exercise. Over the course of a 30-year mortgage with an estimated 10 rounds of refinancing, that could all add up to more than $10,000 which is almost equivalent to a whole year of mortgage interest saved.

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Yet, from our 10 years of experience brokering mortgages in Singapore, what often makes the most impact in interest savings over the long term is not the interest rate you pay in the first year of the mortgage term, sometimes not even the second year.

3. It’s a hassle to do refinancing when you have to change the bank, settle paperwork and set up all the payment process all over again.

It is true, there will be some “work” involved, but many do not realise how hassle-free it has become with digital banking revolution in Singapore.

The entire mortgage application and setting up process is now a breeze. First, with Singapore government’s MyInfo, application at many banks including foreign lenders require just your Singpass access and consent with few other documents required for uploading (things like your option-to-purchase, latest payslip, etc.).

Next, opening of bank accounts can be done online easily within a few clicks. Even the acceptance of the new mortgage can be done remotely as you will do digital acceptance of the letter of offer.

When it comes to arranging for partial monthly repayment of the mortgage using your CPF, that can be done within a few days by simply logging into your CPF account with your SingPass and instructing the change of financier and the amount.

All that is left to do is to make just one trip to the law firm a few weeks before the completion of the refinancing which will not take you more than an hour, as lawyers will need to witness your signing of the mortgage transfer documents. With technological advancements, I suspect even this process which is currently mandated by banks for audit reasons, might also take on a new form sooner than you think.

So, is that one trip to the law firm still a hassle? That depends on your perspective and value of savings. As I have discussed in point 2 above, you stand to save more than $1,000 in each refinancing. Why give that to the bank as well after paying so much already as interests during the year? Give your loved ones a break.

To sum up, getting the right advice working with a true mortgage professional can be a pivotal decision every time you grabble with the decision to refinance or just reprice.  Remember, repricing officers from your bank are there to merely sell the banks’ prevailing packages to you.  They will not be able to give you that vantage viewpoint on what to do at different points in the interest rate cycle.

To give you a clear understanding on all the differences between refinancing your mortgage to another bank, or simply repricing your current home loan, I’ll stack them up for you neatly in a table:

	WHEN YOU REFINANCE	WHEN YOU REPRICE
Efforts involved	No need to call the bank as long you are out of lock-in and clawback (usually >3yrs) period.	Need to call the bank and be kept waiting for the best quote
Documents submission	Need to submit latest income documents via MyInfo	No need to submit any documents
Interest savings	Usually enjoy 0.1-0.2% savings or more	Usually will not get the lowest quote in the market
First-mover advantage	Broker will alert you 4-6 month ahead.  Able to secure mortgage rates in advance especially during cycle-turning years when difference is huge	Banks can usually quote only within 3 months from expiry.  Most end up late as they took action only upon receiving rate revision letters.
Interest-cycle based advisory	MortgageWise.sg strategists advise based on the interest rate cycle – you have the best chance to “stay ahead of the curve”.	Bank officers typically sell to you packages from one bank, hence few can give proper advisory that’s based on the market and the interest cycle.
Taking up home equity loan (for private property only)	Refinancing is the best point to gear up so that the lock-ins will coincide, with no extra legal fees which are mostly covered by bank’s legal subsidy	Additional legal fee $1,500-2,000 to pay with no subsidy to help defray the costs
Relationship with a trusted advisor	With one text message, access the latest mortgage rates from a trusted advisor anytime you or your family members need to review	You have to repeat the efforts of googling, researching, speaking with different people and deciding who to trust, every 2 to 3 years.
Other benefits (promotions)	Enjoy the best promo, incentive, vouchers, etc. as a new customer to the bank which typically has higher marketing budget for new account acquisitions. Not only that, a new bank allows you to discover new mortgage features which you may not be aware of.  Eg. waiver of penalty during lock-in if you like to sell, premier banking privileges, interest-offset account, etc.	Not entitled to any promotional gifts as existing customer of the bank.

Finally, let me qualify that, to some, this article may sound self-serving, which I will not deny to some extent.  However, the points presented are objective and accurate which I stand to be corrected.

No bank, for that matter, no profit-driven company, likes it when existing customers attrite to another bank.  But enlightened companies will do well to understand two things: First, the disinflationary forces of the information age is unstoppable as I have already explained.  So long as homeowners need to compare mortgage rates, comparison sites and brokers like us will continue to fill that gap in the market place.  Second, therein lies  the opportunity for banks and companies to focus on retention which is what free market is all about.  Consumer is the ultimate winner here.

But for free market to work, you have to do one thing – exercise your free choice.

Work with the most experienced team of mortgage strategists helping clients to navigate the myriad of Singapore mortgage rates through cycle-turning years since we started operations: 2014 | 2016 | 2019 | 2020 | 2022-Present.

Your mortgage is a long-term liability. Don’t just reprice out of convenience, or go for quick gains in one-off deals. Partner with MortgageWise who gives you the ultimate gift that no brokers or repricing bank can offer – learn how to generate passive income through mortgage structuring and an autopilot cash flow system to become Mortgage-Free* in 6 Years!

Be it for the best home loan Singapore or even commercial property loan. , work with us for the most comprehensive rates and cycle-based advice. Not to mention, you’ll also be helping to support our social cause!

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Disclaimer: MortgageWise Pte Ltd is not in the business of providing financial advice nor are we licensed or regulated by MAS under the Financial Advisory Act (FAA) in Singapore. All information presented are opinions and any representations given, whether by way of example, illustration or otherwise, are purely portfolio allocation advice and not recommendations or inducements to buy, sell or hold any particular investment product or class of investment product.  All opinions are generic in nature and are not tailored to the particular circumstances of any reader.  Seek advice from a qualified financial advisor before making any investment decision.

Though every effort has been made to ensure the accuracy of the information and figures presented, we make no representations or warranties with respect to the accuracy or completeness of the contents in this blog and specifically disclaim any implied warranties or fitness for a particular purpose.  We shall not be held responsible for any financial loss or any other damages suffered whatsoever, directly or indirectly, if you choose to follow any of the advice or recommendations given in this blog.

* Subject to ownership of a Singapore private property, meeting of certain loan & seed capital requirements, interest rate not going into anomalies like the Great Inflation of 1965-1982 and other typical investment risks