Property Finance
Mortgage Lock-in Ending: Repricing Versus Refinancing
When your mortgage lock-in ends, your bank will not remind you that you have options. Repricing and refinancing solve the same problem in different ways, and the cheaper-looking one is not always the better one.
Key Takeaways
- Once your lock-in period ends, your mortgage typically reverts to a floating or reference rate that is often higher than what you were paying.
- Repricing keeps your loan with your existing bank on new terms; refinancing moves your loan to a different bank entirely.
- Refinancing usually offers more competitive rates but comes with legal and valuation costs that repricing avoids.
- Any cash rebates, subsidies or promotional benefits from your original loan may be subject to a clawback if you refinance within a specified period.
- The right choice depends on the rate gap, the remaining loan tenure, and whether the savings outweigh the switching costs - not on which option sounds simpler.
Somewhere between the second and fourth year of most home loans, a letter or email arrives quietly noting that your lock-in period is ending soon. It rarely explains what that actually means for your monthly instalment, and it almost never volunteers that you have options. This is the moment worth paying attention to, because doing nothing is itself a choice - usually the most expensive one available.
Most homeowners only think about their mortgage twice: once when they take it out, and once if something goes wrong. The years in between run on autopilot, which is exactly how a loan can quietly revert to a meaningfully higher rate without anyone noticing until the monthly instalment changes. This article works through what actually happens at the end of a lock-in period, and how to decide between the two main ways of responding to it.
The moment your lock-in ends
Most home loans in Singapore are structured with an initial lock-in period - commonly two to five years - during which you are offered a specific promotional rate, often lower than what the bank charges once that period ends. Once the lock-in expires, your loan typically reverts to a floating rate pegged to a reference rate such as SORA, plus a spread set by the bank. This reversion rate is frequently higher than your original rate, sometimes significantly so, and it takes effect automatically unless you act.
The reason this catches people off guard is that the lock-in period is designed, quite reasonably, to give the bank certainty over your business for the first few years. Once that certainty period ends, the bank has no particular incentive to keep you on the same favourable terms unless you actively ask - or actively look elsewhere. Silence is interpreted as acceptance of the reversion rate, not as a request for something better.
Watch the timing
What repricing means
Repricing means staying with your existing bank, but switching to a new loan package or rate that the bank currently offers. It is generally the simpler and faster of the two options, because your bank already holds your financial records and does not need to conduct a fresh, full credit assessment in the way a new lender would. Repricing typically involves an administrative fee, but avoids the legal and valuation costs associated with moving to a new bank entirely.
The trade-off is that your existing bank has less incentive to offer you their most competitive rate, since they are not competing for your business the way a new bank would be. Repricing rates are often reasonable, but rarely the most aggressive rate available in the market at that time.
In practice, most banks will send you a repricing offer automatically as your lock-in period approaches its end, or make it available on request through your relationship manager or online banking portal. It is worth treating this offer as a starting point for negotiation rather than a final figure - simply asking whether a better rate is available, particularly once you can show a competing quote, sometimes yields a meaningfully improved offer.
What refinancing means
Refinancing means moving your outstanding loan to a different bank entirely, which then pays off your existing loan and issues a new one under its own terms. Because the new bank is actively competing for your business, refinancing often unlocks more competitive rates and terms than staying with your current bank. It also comes with more overhead: a fresh valuation of your property, legal fees for the new mortgage, and a full reassessment of your financial position, including your current TDSR or MSR position at the time of the new application.
This reassessment is worth planning for, not just tolerating. If your income, existing debt or other financial circumstances have changed since you first took out the loan - for better or worse - refinancing is the point at which those changes get reflected in your eligibility. A household whose income has grown since their original purchase may find refinancing straightforward; a household carrying more debt than before may find their options narrower than expected, which is worth knowing before committing to the legal and valuation costs involved.
Fixed versus floating, briefly
Whether you reprice or refinance, you will generally be choosing between a fixed-rate package, where your rate stays constant for a set period regardless of market movements, and a floating-rate package, typically pegged to a reference rate such as SORA (the Singapore Overnight Rate Average) plus a bank-set spread. Fixed rates offer predictability - your instalment does not change during the fixed period - at the cost of usually starting slightly higher than a comparable floating rate at the time you sign. Floating rates move with the market, which can work in your favour when rates fall and against you when they rise.
Neither is universally better. A household that values a predictable monthly budget, or expects rates to rise over their next lock-in period, often leans towards fixed. A household comfortable with some variability, or expecting rates to ease, may prefer floating. This choice sits alongside, not instead of, the repricing-versus-refinancing decision - you can reprice into a fixed or floating package with your existing bank, and you can equally refinance into either with a new one.
Costs to watch on either path
- Legal fees - typically only for refinancing, since repricing usually does not require a new mortgage to be registered.
- Valuation fees - generally required for refinancing, not for repricing.
- Administrative or processing fees - smaller, but usually present for both options.
- Clawback of cash rebates or subsidies - if your original loan came with a cash rebate, subsidised legal fees, or other incentives, refinancing within a specified minimum period may trigger a requirement to repay some or all of that benefit.
- Early redemption penalties - if you are still within your current bank's lock-in period, breaking the loan early to refinance elsewhere may attract a penalty.
Important to know
Clawback terms are worth reading carefully rather than assumed, since they vary considerably between banks and packages. Some clawbacks apply only to cash rebates, others extend to subsidised legal fees or valuation costs, and the minimum holding period that triggers them can range from a year to several years. The original loan offer letter you signed will state these terms precisely - it is worth digging it out before assuming either way.
When each tends to make sense
Repricing tends to make sense when
The rate gap between your bank's repricing offer and the best available refinancing rate is small, your remaining loan tenure is short enough that legal and valuation costs would take a long time to recoup through savings, or you simply want a fast, low-friction switch without a full reassessment.
Refinancing tends to make sense when
The rate gap is meaningful, your remaining loan tenure is long enough that the switching costs are recovered well within a reasonable period, and you are not exposed to a significant clawback on your existing loan's benefits.
A useful mental shortcut is to work out the payback period for the switching costs - divide the total upfront cost of refinancing by the additional annual savings compared to repricing. If that payback period is comfortably shorter than your remaining loan tenure, refinancing usually wins on pure economics. If it is close to, or longer than, your remaining tenure, repricing's lower friction becomes the more sensible default.
A worked comparison
Consider an illustrative household with S$500,000 remaining on their loan and 18 years left on the tenure. Their existing bank offers a repricing rate 0.3 percentage points below their reversion rate. A competing bank offers a refinancing rate 0.6 percentage points below the reversion rate, but with S$3,500 in combined legal and valuation costs.
| Factor | Repricing | Refinancing |
|---|---|---|
| Rate improvement vs reversion rate | 0.3 percentage points | 0.6 percentage points |
| Upfront switching costs | Minimal (admin fee only) | ≈ S$3,500 (legal + valuation) |
| Approx. annual interest saving on S$500,000 | ≈ S$1,500 | ≈ S$3,000 |
| Time to recover switching costs | Immediate (minimal cost) | ≈ 14 months |
| Best suited when | Short remaining tenure, small rate gap | Long remaining tenure, larger rate gap |
In this illustrative case, refinancing saves more per year, but only becomes the better choice once the household has held the new loan long enough to recover the switching costs - a little over a year, in this example. With 18 years of tenure remaining, that payback period is comfortably worthwhile. A household with only two or three years left on their loan might reach the opposite conclusion.
It is worth seeing how a seemingly small rate difference compounds over a longer remaining tenure, since a 0.3 or 0.6 percentage point gap can sound negligible in isolation but adds up meaningfully across the life of a loan.
| Rate improvement | Over 5 years | Over 10 years | Over remaining tenure (18 years) |
|---|---|---|---|
| 0.3 percentage points (repricing) | ≈ S$7,500 | ≈ S$15,000 | ≈ S$27,000 |
| 0.6 percentage points (refinancing) | ≈ S$15,000 | ≈ S$30,000 | ≈ S$54,000 |
Figures like these are why it is worth reviewing your mortgage properly at every lock-in expiry, rather than accepting whatever rate happens to apply by default. The gap between doing nothing and taking even a modest improvement, sustained over a multi-decade loan, is rarely a trivial amount.
Want to test this with your own numbers? Try the Mortgage Repayment Calculator.
Why this is worth reviewing more than once
A home loan with a typical 25 to 30-year tenure will usually pass through several lock-in cycles over its life, not just one. Each cycle is an independent opportunity to reassess repricing against refinancing, using whatever rates, fees and clawback terms apply at that specific point in time - not the terms that applied when you first bought the property. A household that got a great refinancing deal five years ago should not assume the same bank remains the best option today; market rates and competing packages shift continuously, and the only way to know is to check again each time a lock-in period approaches its end.
How to negotiate either one
- Request your repricing offer from your existing bank in writing before you start comparing external refinancing offers - it is a useful benchmark and costs nothing to ask for.
- Get at least two or three refinancing quotes from different banks or through a mortgage broker, since rates and legal subsidy packages vary.
- Ask your existing bank directly whether they will match or improve their repricing offer once they know you are comparing external options - banks sometimes will, given the cost of losing a customer.
- Confirm the total first-year cost of each option, including any legal subsidy the new bank offers to offset your switching costs, not just the headline interest rate.
Timing the switch
Refinancing takes time - typically several weeks to a few months, once you account for document preparation, valuation, and legal work. Most banks also require advance notice if you intend to redeem your loan early to refinance elsewhere, commonly around three months, so that they can process the redemption without triggering an early redemption penalty. This means the planning for your next mortgage package should start well before your lock-in period actually ends, not on the day the reversion rate kicks in.
Watch the timing
Final perspective
Repricing and refinancing are not a test of financial sophistication - they are simply two different tools for solving the same problem, and the right one depends on numbers specific to your loan: the rate gap, your remaining tenure, and any clawback or penalty exposure. The one mistake worth avoiding entirely is doing nothing, and letting your loan quietly revert to a higher rate simply because reviewing the options felt like more effort than it was worth.
A useful habit, once you have gone through this exercise once, is to calendar your next lock-in end date the moment you sign a new package - whichever option you choose. The entire cycle of researching, comparing and switching tends to feel less daunting the second time, and a household that reviews its mortgage every few years, deliberately, rarely finds itself paying a reversion rate for longer than necessary.
Sources & References
This article provides general information and does not constitute legal, tax or financial advice. Property policies and eligibility criteria may change. Check the latest requirements with the relevant authorities or seek professional advice for your circumstances.
Co-Founder, MOP Freedom · Property & Mortgage Strategist
Numbers are useful on their own. The harder part is understanding how they fit together.
These calculators and examples can give you a useful starting point. If you would like to look at your property, financing and next-home options together, speak with Amanda or Terence for a no-obligation discussion.
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