Kiwi Mortgages


Refinance Mortgage with Better Interest Rates & Terms

It is always a good idea to keep reviewing your home loan portfolio to ensure it is still helping you meet your financial objectives and is correctly structured suiting your cash flow and is helping you meet your objectives.

Refinancing is one of the tools that people often use to realign their home loan portfolio to their current situation. The change in your financial situation may warrant a review, which in turn may result in refinancing to another lender. Such changes in your financial situation may include changes in your household composition, movement in your assets/liabilities, and changes in your income or employment due to various factors. The decision to refinance to another lender from their existing lender may also be influenced by current external factors, such as interest rate movement, future economic forecast, offers from other lenders, etc.

By Refinancing to another lender, you pay off your current loan with a new one, aiming to benefit you in achieving your objectives, which may include taking advantage of lower rates, cash-back offers from competitors, readjusting your loan term to increase or reduce your loan repayments, consolidate your external debt into your home loan, funding some urgent unavoidable big expenses, seeking funds for big-ticket purchases such as an investment property, etc.

There are several reasons why you might consider refinancing:

  • Refinance to obtain a lower interest rate.
  • Refinance to access new features like flexible repayments, redraw facilities, or an offset account.
  • Refinance to release equity from your property so you can invest, travel, or renovate.
  • Refinance to make it simpler to manage your finances by combining debts like a credit card, personal loan, or car loan with your mortgage.
  • Refinance to restructure your home loan and increase your repayments, so you can repay your loan faster.
  • Refinance to restructure your home loan and reduce your repayments for reasons such as an increase in interest rates, temporary adverse change in your income situation, etc.
  • Refinance to diversify your property portfolio – some investors prefer this strategy.
  • Refinance to benefit from cash-back offers from lenders.

Signs that indicate you might consider refinancing your home loan:

  • Interest Rate movement- You may consider refinancing when interest rates are reduced to take advantage of the lower interest rates offered by competitors.
  • Short-term debt with a non-bank lender- You may consider refinancing when your existing lender is a non-bank lender with a high interest rate and your personal situation has changed for the better, which means you could explore refinancing to a mainstream bank at a lower interest rate and more favorable loan terms.
  • Current high repayments- You may consider refinancing when you have short-term debt with high repayments which you are finding difficult to repay.
  • Have extra cash- You may consider refinancing and restructuring your home loan increasing your repayments to repay your home loan faster. The policy of some banks around extra repayments might be more suitable to your specific situation and needs.
  • Just bought a business- Some businesses have an invoicing model where a large number of their customers will have direct debits set up in favour of the business. In such cases, refinancing your home loan to the same bank may potentially be a prudent decision.
  • Multiple properties portfolio- Some investors prefer to diversify their properties & lending portfolios across different lenders and refinance to more than one bank.
  • Looking for some specific features- Such as an “offset facility” as many banks do not offer this facility, although almost all banks offer revolving credit facilities. If you like to maintain purpose-specific accounts and wish to have an offset facility and your bank does not have it, you may consider refinancing the bank that offers this facility.

In our busy daily lives, it is just so easy to lose sight of and ignore the small changes in your own situation which may warrant a review of your loan portfolio. As a general guideline, you should keep reviewing your home loan, keep a close eye on external factors as explained above, and have a full review at least at every fixed rate expiry.

Refinancing your home loan offers more than just saving money on monthly mortgage repayments. By making correct decisions and collaborating with an experienced mortgage broker, you can proactively progress toward achieving your long-term financial objectives.

It is advisable to seek advice from a reliable financial advisor or lender who can assist you throughout the process and assess whether refinancing is the appropriate step for your individual circumstances.