Refinancing your home

Standard Chartered Bank

Many people have become locked into buying a property and paying off the loan over 35 years. These days, being locked into a home loan may not satisfy your life goals. But what if you have an existing home loan? You may want to refinance your existing home loan with another home loan that offers many benefits, is flexible and allows you to own your home faster.


Refinancing is replacing an old mortgage with a new mortgage agreement while using the existing property as collateral. It is a simultaneous process in which the proceeds from the new mortgage are used to pay off the balance of the existing loan.


There are several reasons for refinancing. The most common and compelling reason that has caused many homeowners to jump onto the refinancing bandwagon is the opportunity to reduce their mortgage rate and to decrease their loan tenure. As the mortgage market is fuelled by the cheaper rates offered, the new generation of flexible home loans where even switching costs are borne by many financial institutions, it is no wonder that homeowners are now finding it attractive to refinance their home loan.

Homeowners generally stretch their dollar by refinancing their existing loan to release some funds for investment. Perhaps the value of the house has gone up and you want to release equity in your home to make way for your children’s education, finance the purchase of a car or simply to refurbish the whole house. Refinancing makes a whole lot of sense if the new mortgage offers more flexibility and benefits or allows you to own your home faster.


– to take advantage of an interest rate reduction.

– to reduce monthly payments.

– to release equity tied up in property.

– to shorten mortgage payments (35 to 15 years).

– to take advantage of significant flexibility and benefits offered by the lending institution.


In refinancing, there are charges imposed such as legal fees, valuation fee, processing fee, and stamp duty.

It is essential that homeowners carry out some research to determine if they benefit from this arrangement. Therefore, seeking professional financing advice is advisable. By conducting a financial health check, you can determine the impact of refinancing has on your cash flow, net worth, and whether you are ‘borrowing’ within a healthy prescribed debt gearing ratio.


The decision to refinance varies from person to person. The determining factors include – how long you intend to live in your home, the closing costs and charges incurred, and the duration of the existing mortgage.

Consider the duration of the original mortgage. If your current home loan is 10-years-old (of a 30-year mortgage), refinancing into a new 30-year mortgage will essentially mean you start repayments all over again.


This idea is not a new invention as cash back in the mortgage business is available in the West, and also in Hong Kong and Australia. Cash back means that when you take out a mortgage with a financial institution, you will receive a certain percentage of the loan amount back in cash. Of course, the higher the loan amount, the higher the cash back will be. Nonetheless, there is always a cap on the maximum cash back given. With cash back, this allows homeowners the liquidity for investing or simply to renovate the house. However, in any commitment, it is crucial to look closely to determine if cash back is really worthwhile for you in the long term.


If refinancing is the right option for you, the next step is essentially the same process as what you took when you applied for a mortgage. The required documents need to be presented for the financial institution to verify your income, employment, account balances and current loan repayment history to determine if you qualify for refinancing. For those with a good payment history, the process is quite fast.

This article is for general information purposes only and while the information in it is believed to be reliable, it has not been independently verified by us. You are advised to exercise your own independent judgement with the contents in this article.