While ‘refixing’ and ‘refinancing’ might sound similar, they’re quite different options – and understanding the difference could save you thousands of dollars.
Think of your mortgage like a phone plan. When your current “plan” (fixed rate) is about to end, you’ve got two main choices: stick with your current provider or shop around for a better deal.
Over the past year, interest rates have come down from the highs many borrowers felt during 2023 and 2024, and as fixed terms expire, refinancing is firmly back on the agenda for Kiwi households.
But here’s the thing … the question is no longer simply whether rates are lower than they were. The better question is whether your mortgage is still structured in a way that supports where you’re heading next.
Staying put (Refixing)
Think of this like renewing your phone contract with the same company. It’s easy, there’s no mountain of paperwork and you keep working with the bank you know. Hopefully your current bank has better rates than what you are currently on. But … your situation might have changed since you first took out this mortgage, and it may not be the best fit for you anymore.
Shopping around (Refinancing)
This is like switching to a different phone provider for a better plan. You might do this to get a lower interest rate. Even a small drop in interest rates can save you thousands over the term of a mortgage. Lower monthly payments mean more cash in your pocket. But refinancing isn’t only about chasing a cheaper rate. A proper mortgage review can uncover opportunities that have nothing to do with the headline number.
Your mortgage may have been structured around a very different stage of life. Maybe you’ve had a pay rise, started a family, or built up equity in your property. Perhaps you’re now thinking about investing, renovating, or paying the mortgage down faster. A lot can change in just a few years, yet many borrowers simply roll onto another fixed term without ever reviewing whether their current structure still makes sense.
Refinancing will more than likely come with some costs as you are essentially creating a whole new mortgage agreement.
Depending on your situation, though, it may also help you:
- Consolidate higher-interest debt (credit cards, personal loans, car loans) into one lower-rate facility
- Access equity for renovations or future investments
- Create more flexibility through offset or revolving credit facilities
- Restructure lending to better match your long-term goals
- Improve cash flow during a changing financial season
The right strategy looks different for every household, which is why a proper review is often more valuable than simply comparing advertised rates online. This is where a Mortgage Adviser will help you understand these costs and work out if it is worth the risk.
Is now the right time to review?
Many homeowners are currently coming off rates that were fixed during a very different interest rate environment. At the same time, there’s growing uncertainty around where rates may head next. Economists and market commentators are increasingly suggesting we have hit the bottom of the current cycle, with future movements likely depending on inflation and economic conditions. That makes reviewing your mortgage more important than trying to predict the next rate move.
You may benefit from a review if:
- Your fixed rate expires within the next six months
- You haven’t reviewed your mortgage structure in the past two years
- Your income or expenses have changed significantly
- You’re considering renovations, investing, or debt consolidation
- You simply want confidence your mortgage is still working for you
Come and talk to a Mortgage Adviser
Before you make any decisions, it is important to think about your money situation right now, your future financial goals, if there are any costs involved to switch. Talking to a Mortgage Adviser is a great start.
At CM Financial Advisers our Mortgage Advisers, will look at the big picture. They know all the different lenders (bank and non-bank) and their criteria. A Mortgage Adviser will give you a full scope of advice, help you understand all your options and they have your best interest at heart. Our Mortgage Advisers are not aligned with any bank and have access to specialist lenders. They are experts in their field and keep up to date with the latest interest rates, market conditions and application processes.
The best mortgage strategy isn’t always about getting the lowest rate. It’s about making sure your lending continues to support the life you’re trying to build. Give us a call, text or email.
