Coming up for renewal?
Is refinancing going to save you money?
Refinancing refers to the process of moving your mortgage from one bank to another, and re-negotiating the terms of the loan, and in most cases, saving money in the process. We only ever recommend refinancing if your own bank is unwilling to come to the party and meet your rate expectations and/or new lending requirements.
When assessing whether refinancing is going to save you money, it’s important to consider the financial costs involved, as well as the time commitment required.
Step 1: We’ll approach your own bank for their most competitive rates and cash retention offer.
If this is in line with your expectations, great! No need to refinance. We’ll help you review your loan structure and send you happily on your way. At any one time we’ll have multiple applications with each bank across New Zealand, for many different clients, so have a good feel for what rates you should be able to expect.
However, often your existing bank will be unwilling to compete for your business. We often find banks are a lot more eager to please their new clients over their existing clients. If your bank is unwilling to negotiate, or unable to accommodate you because you don’t meet their lending requirements, we’ll be able to help you assess other options with New Zealand’s most competitive banks.
Step 2: Before proceeding we’ll assess the costs involved, and make sure the benefits outweigh the costs.
Refinancing usually involves a solicitor to prepare the new mortgage, and potentially paying some break fees to the bank if you have a fixed mortgage rate. We’ll add these costs into the calculation so you can see the net benefit. We can give you a 95% accurate representation of the end result long before you’ll need to produce a full application.
Generally, when figuring out whether or not it’s worthwhile to refinance, you need to calculate the difference between the interest you’re current paying, and the interest you’d be paying on your new, lower interest rate. This interest saving, combined with a negotiated cash-back offer from the bank will show you the gross saving. After minusing the costs involved, you’ll find your net benefit from refinancing.