6+ Proven Ways To Lower Your Home Loan Interest

If you’re a homeowner in Singapore—or planning to be—then you’re probably watching the home loan interest rate in 2025 with a mix of curiosity and anxiety. With rates still higher than the historic lows of the pandemic years, many Singaporeans are asking the same question: how to reduce home loan interest rate? 

The truth is, interest isn’t just something you’re stuck with. With the right strategies, you can reduce home loan interest rates and save tens of thousands throughout your loan. Here’s how.

How To Reduce Home Loan Interest Rates?

Want to know how to reduce the home loan interest rate? You need to understand a few basic things. In the following section, we will be discussing this question. So that people could rest easy and not be stressed out about their mortgage. 

1. Make Smart Choices Right at the Start

When you take your first mortgage, you’re making decisions that will shape your finances for decades. Don’t rush through this stage—it can save you a fortune in the long run.

Opt for a Larger Downpayment

This one’s simple. The less you borrow, the less interest you pay. Making a larger down payment immediately reduces your bank home loan interest rate burden by shrinking your loan amount. Even if you’re using CPF, topping up with some cash can make a notable difference.

But don’t empty your savings. Always leave a buffer—emergencies don’t wait for your mortgage to settle.

Pick the Right Loan Tenure

A shorter tenure means higher monthly repayments, but lower interest over the life of the loan. A 20-year mortgage can help you save far more in interest compared to a 30-year one, even if both carry the same mortgage loan interest rate.

Still, affordability comes first. Don’t stretch too thin. You can always increase repayments later once you’re in a more financially stable position.

2. Don’t Sleep on Refinancing

Many homeowners in Singapore treat their mortgage like a static monthly bill. That’s a mistake. Loans should be reviewed every few years to check if you’re still getting a competitive rate.

Refinance to a Better Deal

If your current home loan interest rate is no longer competitive, refinancing with another bank can bring significant savings. Yes, there might be legal and valuation fees, but the long-term gains usually outweigh them.

A well-timed refinance can shave off tens of thousands over your tenure, especially when you lock into a lower home mortgage loan interest rate.

Reprice Within the Same Bank

Don’t want the hassle of refinancing? Ask your current bank for repricing options. It’s quicker and cheaper, with fewer penalties and less paperwork.

3. Accelerate Payments Midway

If your financial situation improves after a few years—maybe you got a raise, or you received a bonus—consider using that extra income to reduce your loan principal.

Make Partial Lump-Sum Repayments

Applying a lump sum directly to your principal will reduce your mortgage loan interest rate burden. Even a $10,000 repayment early in the loan can save several thousand in interest.

However, be sure to check for lock-in clauses or early repayment penalties before making a decision.

Top Up Your Monthly Instalments

Another powerful option is gradually increasing your monthly payment. Add an extra $100–$200 each month if possible. It chips away at your principal faster and over time, reduces both tenure and total interest paid.

4. Pay an Extra Instalment Annually

One sneaky but effective trick? Make 13 monthly payments a year instead of 12.

This “extra” payment, made once a year, can significantly reduce the length of your loan and substantially lower your interest. You won’t feel the pinch too much if you align it with your bonus period or year-end incentives.

5. Use Tech & CPF to Your Advantage

Singapore offers a range of tools and government schemes to help you manage your housing costs effectively. Don’t overlook them as they are a crucial aspect for home loan interest rate.

Leverage Your CPF Wisely

Your CPF Ordinary Account can be used to repay your mortgage, which helps preserve your monthly cash flow. However, remember that every dollar you withdraw from your CPF must be repaid, with interest, if you sell your home.

A smart move? Use CPF for your regular installments, but make lump-sum repayments in cash whenever possible. That way, you retain flexibility without overcommitting CPF funds.

Track with Calculators and Comparison Tools

Before refinancing or adjusting your payments, use mortgage calculators to simulate the potential outcomes. These tools help you see the real impact of small changes—like a tenure reduction or partial repayment—on your home loan interest rate in 2025.

Many platforms enable real-time comparisons of mortgage loans, including side-by-side comparisons of features, lock-in periods, and fees.

6. Keep an Eye on Your Credit Score

Yes, your credit score affects your home loan interest rate. A higher score tells banks you’re a low-risk borrower, which means they’re more willing to offer better rates.

Check your report annually via Credit Bureau Singapore and avoid missed payments on any type of credit—yes, even your phone bill matters. Maintain a credit usage below 30% and avoid unnecessary loan applications.

Good credit can translate into significant interest savings when you refinance or apply for a new loan.

Bonus Tip: Plan for Rate Cycles

Global trends influence Singapore’s mortgage loan interest rate. Don’t panic when rates rise—and don’t get complacent when they fall.

Use rising rate periods to lock in fixed deals and review floating options regularly. When rates fall, be ready to act—refinancing at the right moment can secure your savings for years to come.

Staying proactive is the ultimate hack for keeping your bank’s home loan interest rate as low as possible.

Can Home Loan Percentage Be Brought Down For Real?

We were able to educate you on how to reduce your home loan interest rate. In any case, you must remember that banks do not work in any mysterious way. If you follow the steps we have mentioned, then the process becomes quite easy. 

Then again, you need to understand that this comes with a learning curve. Hence, you must spend your time and energy on your research. If you require more specialized advice, please consult a professional, as they may be able to provide a clearer understanding.

Read More:

• How to Secure SME Funding in 2025
• The Fractional CIO Playbook for Scaling Startups
• What to Expect When Transitioning to ABA Software