Refinancing Your Mortgage in NZ: Top FAQs Answered

With falling interest rates set to continue over 2025 now is the time when many Kiwi homeowners can
start to feel the burden of keeping up with mortgage repayments easing. If this sounds like you,
refinancing your mortgage at this time could be a smart solution to ease the financial strain and finally
improve your overall situation.

Refinancing involves replacing your current mortgage with a new loan—often with better terms or a
lower interest rate. This can reduce your monthly repayments, help consolidate high-interest debts, or
free up cash for other needs such as family expenses, investments, or even a well-deserved holiday.
Here are answers to some of the most common questions about mortgage refinancing in New
Zealand:

How Does Refinancing Work?

Refinancing typically means switching from one bank to another or opting for a non-bank lender. The
main reasons to refinance include:

• Consolidating debts like credit cards into your mortgage to save on interest.
• Securing a lower interest rate or more flexible loan terms.
• Freeing up cash or securing an interest-only repayment period to manage rising living costs.
• Refinancing can provide breathing room, helping you better manage finances during challenging
• times.

What Are the Benefits of Refinancing My Mortgage?

There are several advantages to refinancing, including:

• Lower interest rates and reduced monthly repayments.
• The option to choose a loan structure that better suits your needs, such as fixed, floating, flexi,
• or offset loans.
• Access to substantial cash incentives—some banks offer up to 1% of your loan amount to
• cover costs like legal fees or loan setup charges.
• However, switching banks will require some effort. You’ll need to transfer direct debits, automatic
• payments, and salary deposits to your new account. New ATM cards or credit cards may also be
• required.

What Should I Know Before Refinancing?

Refinancing is only worth pursuing if it puts you in a better financial position. Here’s what to consider:

Paperwork and Spending Review:
Banks will closely examine your expenses, including daily living costs, childcare, and even
lifestyle spending like dining out. It’s wise to review your habits at least 3 months before
applying.

Costs:

• Break Fees: If you’re on a fixed interest rate, there may be break fees—but when rates
• are rising, these can often be minimal or even zero.
• Legal Fees: Expect legal costs of $2,000–$3,000. Affordable options like conveyancing
• centres may save money.
• Valuations: Some lenders may require a registered property valuation, which could
• cost around $1,500.

Time Commitment:
You’ll need to provide documents such as bank statements, ID, and rates notices. A mortgage
broker can help streamline the process and save you time.

How Much Does It Cost to Refinance a Mortgage?

Costs vary depending on your circumstances, but here’s a rough breakdown:

• Break Fees (for Fixed Rate Loans): Minimal to zero in a rising interest rate environment, however with rates now falling these can be significant. It is aways best to check with your Bank early on. If you are switching Banks, then they may pay a cash incentive that may cover this. Your Mortgage Broker can advise you on this.
• Legal Fees: $2,000–$3,000 (or lower via conveyancing centres).
• Registered Valuation: Around $1,500 if required.
• Refinancing is also a great opportunity to review your financial setup, including wills, family trusts, and
• insurance. Updating your income, medical, or life insurance cover could save you money and provide
• added security.

Ready to Refinance? Let Us Help!

Refinancing can feel complex, but with the right guidance, it’s a powerful way to reduce costs and
regain control of your finances.
Contact the experienced team at First Rate Mortgages today for personalised advice and support.
We’re here to help you make refinancing simple and stress-free!