Dan Crawford
Refinancing is about more than just finding a lower rate, it’s about making sure your debt is structured to save you money in the long run. With a Loan Market adviser on your side, you can:
Refinancing is the process of moving your home loan from your current bank to a new lender. Essentially, you take out a new mortgage with a different bank to pay off your existing one in full. People typically do this to secure a more competitive interest rate, take advantage of fresh incentives, or access a different loan structure that their current bank might not offer.
Refixing is simply choosing a new interest rate with your current bank once your fixed term ends. Refinancing, on the other hand, involves switching lenders entirely. While refixing is a quicker process, it limits you to whatever rates your current bank is offering.
Working with a Loan Market adviser allows you to compare your bank’s refixing offer against the rest of the market to see if switching lenders will save you more money in the long run.
If you refinance before your current fixed-rate term expires, your bank may charge a fixed-rate break fee (also known as an early repayment adjustment). This fee covers the bank’s loss when you pay back a loan earlier than agreed. These fees vary depending on current market rates.
Your Loan Market adviser can request a break fee quote from your current bank for you and help you calculate if the savings from a lower interest rate outweigh the cost of breaking your current contract.
While refinancing can save you money, there are some upfront costs to consider. These typically include legal fees (usually between $900 and $1,500) to manage the legal transfer of the mortgage on your title. You may also need to pay for a registered valuation of your property if the new lender requires one.
Your Loan Market adviser will help you weigh these costs against any potential incentives or interest savings to make sure the move puts you in a better financial position.
Most lenders in New Zealand prefer you to have at least 20% equity in your home to qualify for their most competitive interest rates and incentives. If you have less than 20% equity, you may still be able to refinance, but you might be subject to a Low Equity Premium (LEP) or a higher interest rate.
Your Loan Market adviser will assess your current property value and loan balance to find the lenders that offer the best terms for your specific equity level.
Many New Zealand banks offer financial incentives, such as cashback offers, to attract new customers. These are usually a percentage of your total loan amount and can be used to cover your legal fees or give your bank account a boost.
It’s important to note that these incentives usually come with a clawback period (typically 3 to 4 years), meaning if you move banks again too soon, you may have to pay some of that money back.
Your Loan Market adviser can explain the fine print and help you find the best available incentives.
When you refinance, you can often roll high-interest debts like car loans, personal loans, or credit cards into your new home loan. This allows you to pay off those debts at a much lower mortgage interest rate, which can significantly reduce your total monthly repayments and free up cash flow.
Your Loan Market adviser will help you structure this carefully to ensure you are actually saving money on interest over the long term.
The process generally takes between 2 to 4 weeks from your initial application to the day your new loan starts. It involves a credit application, a property valuation, and the legal process of updating your property title.
Your Loan Market adviser handles the majority of the legwork, from comparing the market to managing the bank’s paperwork, so you can focus on your finances.
Try the loan repayment calculator to see how a new rate could change your monthly budget.
Let us know what your goals are and we will connect you with a Loan Market adviser directly.
Find out how much you may be able to borrow to purchase property.
Understand the amount you will need to pay your lender before you apply for a home loan and ensure you can comfortably meet your repayments.
No two loans are the same and there are a number of costs to weigh up. Compare two side by side to see the difference.
