Mortgage Interest Cost Singapore: Payments, Principal and Rate Stress

A mortgage instalment contains interest and principal repayment. Both affect monthly cashflow, but only interest is the financing charge: principal reduces your debt. Compare loans over the same horizon and check the balance still owed at the end.

A reproducible S$600,000 example

Assume S$600,000 borrowed over 25 years at a constant 3.5%, with equal monthly payments and no fees. The payment is S$3,003.74. First-month interest is S$600,000 × 3.5% ÷ 12 = S$1,750; principal repayment is S$1,253.74. The next month’s interest is charged on a lower balance.

Early payments are not always mostly interest. At 2.6% on the same loan, first-month interest is S$1,300 out of a S$2,722.02 payment—less than half. Rate and tenure determine the split. MoneySense: monthly-rest interest and borrowing costs.

Five years is different from the full term

At 3.5%, after 60 payments the loan balance is S$517,922.42 and interest paid is S$98,146.91. If the loan runs all 300 months at that unchanged rate, interest totals S$301,122.43. The latter is a scenario, not a forecast for a floating-rate loan.

Stress the rate explicitly

These rows hold the rate constant from the start. An increase from 3.5% to 4.5% in this example raises monthly payments by S$331.25. For a mid-loan reset, calculate using the balance and tenure remaining at that date.

Prepayment and refinancing

Extra principal repayment can reduce future interest, but consumes liquid savings and may trigger fees. A thin cash buffer is a reason to check liquidity before prepaying, not an automatic reason to accelerate repayment. Compare the interest avoided after fees with the role that cash serves in emergencies.

For refinancing, examine both interest savings and remaining balances. Extending the term can reduce payments without lowering total cost. Use the refinance calculator for equal-tenure comparisons and the amortisation calculator for repayment schedules.

Model limits

The examples use annual nominal rate ÷ 12 and payments at month-end. Actual lenders may use daily calculations, rounding, special first instalments and package-specific terms. HDB publishes its own monthly-interest basis. HDB: concessionary rate and monthly interest. MoneySense: home loans, repricing and refinancing.

Last updated: 14 Sep 2026 · Editorial Policy · Advertising Disclosure · Corrections