What are clawbacks and when do they apply?

When you take a bank home loan in Singapore, the bank often provides subsidies to reduce your upfront costs - most commonly a legal fee subsidy of $1,500-$3,000, or occasionally a cash rebate. These subsidies are offered to attract your business, but come with a condition: if you refinance to another bank within the clawback period (typically 3 years), you must return the subsidy in full.

For example, if your bank provided a $2,000 legal fee subsidy and you refinance after 18 months, you would owe that $2,000 back to the bank before leaving.

Key things to know about clawbacks:

• They only apply during the clawback window, which typically is 3 years or mirrors the lock-in period
• They are separate from early repayment penalties (which are a percentage of the loan)
• They do not apply when switching from an HDB loan to a bank loan, HDB does not provide such subsidies
• The new bank will often provide their own subsidy to help offset the clawback cost

Cashew can help you check your loan agreement for the exact clawback amount and window before refinancing.