Reviewing or refinancing.
Staying ahead of the game.
The NZ economy never stands still, so it’s important to review your home loan regularly. You might discover a switch that will save thousands. Here are some tips on what to consider and a summary of how refinancing happens.
The first step is to understand what the term ‘refinancing’ means and how it’s different from other home loan changes, like refixing and restructuring.
What is refinancing?
Refinancing is when you get a completely new loan, usually with more favourable terms, and use it to repay your existing loan. This normally involves switching to a new lender. If you want to stay with your existing lender, you can usually restructure your existing loan rather than starting an entirely new loan.
What’s the difference between refixing, restructuring and refinancing?
Refixing is when you choose a new fixed interest rate term after your current one ends. So you’re just putting your loan, or part of it, onto a new fixed interest rate with the same lender.
Restructuring is when you change the way your loan is set up with your existing lender. It’s usually done when your fixed interest rate term comes to an end, so you don’t have to worry about early repayment penalties. Restructuring helps to ensure your loan is still well designed to support your needs and goals as your circumstances change in life. There are all sorts of possibilities, such as adding a small offsetting loan to the mix so your savings and everyday account balances help to reduce the interest you pay. Or you may need to extend the term of your home loan to reduce your minimum repayments for a while.
Refinancing, as we mentioned above, is replacing your loan with a completely new one, usually with another lender. Refinancing often includes some refixing and restructuring, as you set up the new loan to best suit your needs.
Home refinancing FAQs.
If you’re thinking about refinancing your home, you probably have a bunch of questions in mind and will think of more as you consider your options. Everyone’s situation is different, so the best person to help you is a trusted financial adviser or mortgage broker. In the meantime, here are answers to commonly asked questions about refinancing.
Many mortgage advisers recommend an annual review. The idea is to check whether your financial situation and goals are still the same, and whether you still have the best interest rates and loan structure for your needs. Even if they’re not ideal, you may just need to restructure your loan with your current lender, rather than refinancing with a new one. The point is, it pays to check regularly and plan ahead.
Essential reading for refinancers.
Change is constant. When you set up your mortgage originally, the interest rates were applicable to the housing market at the time. Likewise, the size
Check out the latest home loan rates.
Refinancing your home or a rental property often begins with a review of what you could afford. This helps you get the balance right between repaying your loan quickly and ending up in financial trouble because you over-reached. Our handy calculators make it easy to plan a budget, check your borrowing power and explore the repayments on various loan structures.
Get an estimate of what your repayments could be, based on your mortgage amount, term and interest rate.