When is the right time to refix or refinance my mortgage?

by Nov 10, 2021Mortgages, Refix

When your fixed rate mortgage comes to the end of its term, most lenders will automatically transfer you to a new fixed rate or floating rate home loan. 

As a homeowner, this type of set-and-forget arrangement might sound convenient, but it also means that you could miss out on the opportunity to refix or refinance your mortgage – both of which can potentially save you significant amounts of money in the long-run. 

In this blog post, we discuss the benefits of refixing and refinancing, and highlight the key advantages of working with an independent mortgage broker. 

Why refix or refinance? 

The economy as well as your personal financial circumstances are constantly evolving. A home loan product that may have been a good fit for you a few months ago may not be the best option for you now. 

When you come to the end of your home loan’s fixed interest rate period, you might want to consider refixing or refinancing your home loan. There are many reasons to do so, including: 

  • Securing a more competitive rate: Current market conditions may be more attractive than they were in the past. Locking in a lower interest rate could potentially save you tens of thousands of dollars over the course of your loan. 
  • Tapping into another lender’s services: Refinancing gives you the opportunity to take advantage of another lender’s products or services, which may offer a better rate or greater flexibility than your current home loan provider.
  • Borrowing more money: Depending on your financial situation, refinancing may allow you to borrow more money – perfect if you’re planning on carrying out renovations or have some other large expenses coming up. 

When is a good time to think about refixing or refinancing?

For most people, the best time to think about refinancing or refixing is near the end of your current fixed rate term. Most lenders allow you to refix your mortgage 30 to 60 days before your existing loan comes to the end of its terms, which can be useful for taking advantage of movements in the market. While you don’t necessarily have to wait until the end of your contract to refix your mortgage, you will be charged a break fee if you choose to break your fixed rate term, which may offset your potential savings. 

You might also want to explore refinancing or refixing your mortgage if your personal circumstances change in a way that could significantly affect your income or expenses. For example: 

  • Increased income: A pay rise, bonus or inheritance could allow you to increase your payments or pay a lump sum off of your mortgage. 
  • Selling the property: If you sell your home during a fixed interest rate period, you’ll likely have to pay a break fee to the lender. As such, if you’re thinking about selling your property in the near future, you may wish to opt for a floating mortgage or refix for a shorter period of time. 
  • Growing household: A change in the household dynamics – due to, say, a baby on the way or older relatives moving in – can affect your expenses and might motivate you to refix to the lowest interest rate for the longest period of time. 
  • Reduced childcare costs: Whether the kids are leaving home, changing schools or graduating from daycare, a reduction in childcare costs might allow you to up your mortgage repayments. 
  • Renovating: Refinancing can be a smart way to fund future renovations. 

Refix or refinance your mortgage with iLender

The best way to refix or refinance your mortgage is to talk to a mortgage broker. Technically, it is possible to do it on your own and work directly with a bank, but negotiating the right home loan for your financial goals and unique circumstances can be extremely time consuming. 

Here at iLender, we have a comprehensive understanding of the home loan market. We’ll work with you to understand your needs, and negotiate with lenders on your behalf to help you secure the home loan that best suits your requirements. Best of all, we earn our commission through the lenders, which means our services won’t cost you a cent. These commissions are more or less the same across lenders, so you can be confident that you’re getting honest, unbiased advice every step of the way. 

If you’d like to enquire about our services, give us a call on 0800 536 337 and speak to one of our Advisers.

About iLender

At iLender we put your best interests first and not the Bank – our advice is unbiased as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

Options for when your ‘Interest Only’ term expires

In an increasing interest rate environment, coming off a low interest rate PLUS coming to the end of an ‘Interest Only’ term, can be financially traumatic! Be proactive and explore your options. With a Mortgage of $500,000 on an interest rate of 2.99%, if you refix at...

When a Bank can’t help, where can I get a Home Loan at Bank rates?

Good question! We are asked this a lot, so here's our guide to 'close to, but not a Bank, lending'. The first thing we ask is why? What is it about the application that makes the Bank say No? There are multiple reasons and here are the top five. "I'm self employed and...

4 Tiers of Non-Bank Lending: What You Need to Know

It’s currently a struggle for every New Zealander: trying to get the bank to approve their home loan. Lending restrictions are tighter than ever, even for New Zealanders with a perfect credit history.  Luckily, non-bank lenders offer an alternative approach that...

The New Zealand housing market: Is now a good time to buy?

The New Zealand housing market has experienced some major ups and downs in recent months due to some interesting regulatory changes as well as wider global economic conditions.    House prices across the country have started to fall while interest rates have...

Best mortgage rates, 10% deposit owner occupied and 20% rental purchase, self employed with no financials and help for those with bad credit or arrears.

Hundreds of reviews on TradeMe and Google makes us your ‘Number 1’ choice.

Call 0800 536 337