Should I refinance?
Use our mortgage refinance calculator to see how much you could save with a lower interest rate on your home loan.
How to use this calculator:
- Enter the current value of your loan.
- Enter the original interest rate that you fixed at or the current rate you are floating at.
- Enter the original term of your loan.
- Enter the time left before your current fixed term ends.
- Enter the new interest rate that you would fix at after refinancing.
- Enter the new loan term that you would fix at after refinancing.
NOTE: If you have multiple fixed loans input the total value of these loans and input an average for the interest rate.
“Savings per Month” represents the amount you would save on your monthly mortgage repayments by refinancing your home loan.
“Interest Savings” shows you how much you would save on the interest portion of your loan by refinancing.
“Monthly Payments” represents your new mortgage repayments on a monthly basis.
All potential costs are estimated and included in this calculation. Sometimes banks will charge you 'break fees'. These are factored into these savings estimates.
For more info email Support@irefi.co.nz.
Example refinance calculation:
It’s so handy to have a mortgage calculator to take the emotion out of the equation. Your current bank might charge you $4000 to break your mortgage but at a much lower interest rate (for example going from 5.75% down to 4.15%) might save you $10,000 over the next few years. So the savings minus the break fees equals the benefit to you.
Written as the example suggests: $10,000 – $4,000 = $6,000 savings to you!
The 3 main benefits of lower interest rates
When you refinance or refix your home loan to take advantage of a lower interest rate, there are three main benefits:
- Lower your repayments – With a lower interest rate, you can opt to lower your fortnightly/monthly repayments leaving you with more cash in your pocket each month. This would be preferable if you find it a stretch to make your repayments each month and is great if you’d like a bit more cash every month for covering your expenses.
- Get out of debt faster – With a lower interest rate and by keeping your repayments the same (or even increasing your repayments if you can afford it) you can pay off your home loan quicker. This is best suited for people who can afford to keep their repayments the same and don’t need the extra cash for everyday expenses.
- Get cash from the bank – With a lower interest rate, it makes it cheaper to borrow additional finance. If you’d like to make some improvements to your home or buy an investment property you can use the lower interest rate to borrow at a more favourable cost to you.
As you can see in this example below, by breaking the fixed terms of these loans and taking advantage of a lower interest rate the customer would save over $8,400 over their remaining fixed term. That’s massive and it only takes a few hours of your time!
Learn more about refinancing
What is my property worth? (external link)
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