Refinancing your mortgage
Refinancing is the process of switching your mortgage from one bank to another and renegotiating the terms of the loan. In most cases this is to make savings by getting a better overall deal.
The opposite of refinancing is accepting the status quo, as it’s easy to simply set and forget your home loan and keep making your regular repayments. While accepting the status quo is the easy option for the short-term, over the long run it can cost you tens of thousands of dollars, and add years to your mortgage. To check you're not costing yourself thousands and committing to many years more mortgage repayments than you need to, it's nearly always well worth asking yourself a few questions, including:
- Can I manage my loan repayments? Can I comfortably repay more?
- Have I explored getting a better rate, potentially taking years off my mortgage?
- Have I considered whether it suits me to free up funds to renovate, consolidate debt, or invest elsewhere?
- Am I satisfied with the service of my current lender?
- Is my mortgage structured so I can pay it off as quickly as possible?
- Am I using all the home loan features that I'm currently paying for?
- Is my mortgage structured to reflect my current lifestyle?
If you answered “no” or “I don’t know” to any of these questions, it’s time for you to contact us to explore your options.
What’s stopping you from getting a free review of your mortgage?
A complimentary mortgage review could save you thousands in interest over the life of your loan, helping you become mortgage-free years faster. It's not just about getting a better interest rate, it's also about structuring the mortgage the right way for you. Review your mortgage.
The great benefits of refinancing your existing mortgage
- Take years off your loan term
- Reduce your overall interest
- Access to lower interest rates, that could free up funds to invest elsewhere or repay your lending faster
- Consolidate some or all of your unsecured debt to improve your financial situation
- Access to equity
- Access to cash incentives
Many banks offer cash incentives to switch from your existing bank to another. These incentives usually grow in size based on the size of your mortgage. In most cases these incentives are big enough to cover the costs of breaking your existing loan agreement mid-term, cover any legal fees, and still leave cash in your hand. This means that by using our services you not only get a better loan, but there’s every chance that refinancing will put cash in your hand as well.
However, when assessing whether refinancing is going to benefit you, it is important to consider the financial costs involved. Examples of these are included below:
- Deferred establishment and settlement fees
- Early repayment costs (fixed rate loans break fee)
- Repayment of any cash incentives, if any.
- Legal costs, eg. solicitor, LIM reports
- Valuation fee
- Application fee
- Duties and taxes
- Lenders' mortgage insurance fee (LMI) if LVR is over 80%.
All fees will vary depending on your loan size, lender, term left on your mortgage and the type of loan that you own. Generally, when figuring out whether it’s worthwhile to refinance, you need to evaluate the pros and cons that come along with refinancing and make sure the net benefit outweighs the costs. This is where an adviser can assist.
We'll only recommend refinancing when it genuinely suits you and the benefits outweigh the costs. From experience, we know that banks are usually a lot more eager to please their new clients than their existing clients - which creates a situation where refinancing can result in great offers from New Zealand's leading banks.
Assistance from us to refinance your existing lending is usually free to you, as we'll be paid by the lender. To be transparent, we'll also inform you about it, and as we pay our advisers (often called a mortgage broker) a salary instead of commission, you know we're truly working in your best interests.
We make the process of refinancing your home loan as simple as possible for you. As we’ll take time to understand your situation and explore the options, and only recommend refinancing if it suits you, with thousands of dollars at stake, what have you got to lose?
For a free, no-obligation chat with an Authorised Financial Adviser about refinancing your existing lending, call 0508 MILESTONE (0508 645 378) or leave your details below.