Refinancing to a sharper rate

With the official cash rate back at pre-pandemic levels, many Kiwis may be thinking about switching home loans in search of a better deal.

While a lower headline interest rate can be appealing, it’s important to consider your options and the costs involved with refinancing your home loan.

Why refinance?

There are many reasons to consider refinancing, from wanting to secure a more suitable rate, to accessing extra loan features or finding a more flexible home loan.

You might choose to switch to a different loan type altogether – such as refinancing from a floating rate with your current lender to a competitive fixed rate with a new lender.

Short-term costs

Keep in mind that leaving your current lender could come at a cost. While floating-rate loans often have low or no discharge fees, exiting a fixed rate early could incur big break fees.

To avoid surprise expenses, find out if your new loan has any application or account fees on top of the shiny new interest rate.

Long-term costs

When you refinance to a different lender or home loan, your interest rate and repayments might be lower at first glance – but this often comes with a longer loan term.

With a longer term comes more repayments, which could see you paying more interest over the life of the loan. For help understanding the long-term costs involved, make the most of free online tools like our comparison calculator.

Get the right advice

Every dollar counts, so it makes sense to get an expert opinion before making a switch.

If you’re planning to refix your mortgage, speak with an adviser to explore your options before it is due. A mortgage adviser can provide advice on choosing a term and help in securing a rate that meets your needs.

To find a home loan that fits, contact your local Mike Pero Mortgage Adviser.