The Benefits of Refinancing Your Mortgage in New Zealand
When you first took out your home loan, it was the right fit for your situation.
But life moves on. Incomes change, your financial goals evolve, and interest rates shift. If your current mortgage no longer fits the bill, you’re like so many New Zealanders who are right now considering refinancing.
Refinancing means replacing an existing mortgage with a new one, either with the same lender, or with another provider. And contrary to what many Kiwis think, it isn’t a bad thing.
Handled well, it offers homeowners peace of mind and improved flexibility.
Handled exceptionally well, it has real financial advantages, and that’s what we’re going to cover in this article.
1. Lower Interest Rates and Reduced Repayments
One of the most common reasons to refinance is to secure a more competitive interest rate. Even a small drop can make a noticeable difference to your monthly repayments, freeing up cash flow for other needs.
Another benefit? If you’re already comfortable with your current repayments, refinancing to a lower rate while keeping those repayments the same can help you pay off your loan faster. By maintaining your original repayment amount, more money goes toward the principal each month – potentially saving you thousands in interest and shaving years off the life of your mortgage.
2. Access to Better Loan Features
Not all home loans are created equal. Refinancing can give you access to features that make managing your mortgage easier and more strategic.
These features include:
- Offset accounts that link your savings to your home loan balance.
- Redraw facilities that let you dip into extra repayments if you need them.
- Split loans that balance the certainty of a fixed rate with the flexibility of floating.
These options can be particularly valuable if your income pattern has changed, or if you want more control over how you manage repayments.
3. Consolidate Other Debts into One Loan
If you’re carrying high-interest debts like credit cards or personal loans, refinancing can allow you to consolidate them into your mortgage. By folding multiple debts into a single home loan, you may benefit from:
- A lower overall interest rate.
- A simpler repayment schedule.
- The chance to reduce the total interest you’ll pay over time.
It’s important, though, to approach debt consolidation with care. Stretching short-term debts over a longer loan term can increase the total cost if not managed wisely. A Vega adviser can help you weigh up the pros and cons.
4. Free Up Equity for Other Goals
Your home is not just a place to live, it’s a significant financial asset. Refinancing can allow you to tap into the equity you’ve built up, and use it to fund renovations, purchase an investment property, or cover major expenses.
Accessing equity is not without its risks, which include overextending, or winding up with a new loan structure that’s out of step with your long-term goals.
However, these risks are avoidable with careful planning. And at Vega, that’s our specialty.
Reach out today for a judgment-free, no-obligation chat, and we’ll tell you whether refinancing to access equity is a viable strategy for you.
5. Tailor Your Loan to Your Current Lifestyle
A mortgage you arranged five years ago may not reflect where you are today – and that’s okay!
Whether it’s a career change, starting a family, or moving into self-employment, a major adjustment in circumstances is always a good reason to reassess your existing loan, and take stock of whether it’s still working for you, your current lifestyle, and your future ambitions.
At Vega, we’ve helped huge numbers of Kiwis refinance in the midst of all sorts of circumstances. We’ve seen the difference it’s made to their financial wellbeing, and we’d love to talk about what kind of difference it could make for you.
What to Do Next
If you’re questioning whether your current mortgage is still working for you, it’s worth reviewing the alternatives – and a conversation with an adviser is the best place to start.
We’ll quickly clarify if refinancing makes sense for your situation, and then provide you with an easy-to-understand roadmap of the whole process – from comparing loan options, to securing a mortgage that fits your needs now.
Ready to explore your refinancing options?
Get in touch with us today, and we can take it from there.