How Often Can You Refinance Your Mortgage?

A Guide for the Kiwi Homeowner

Refinancing your home loan can be an attractive option for a variety of reasons, including securing lower rates, consolidating debt, increased flexibility, or accessing your equity. In some cases, refinancing can even help you achieve financial freedom, faster.

With these potential benefits in mind, you may be asking yourself:

How often can you refinance your mortgage in New Zealand?

Legally speaking, there’s no limit on how frequently you can refinance. While there are refinancing guidelines set by both the government and lenders, ultimately, it’s your home, your loan, and your financial decision. So, the simple answer is:

In New Zealand, you can refinance as often as you like.

However, it’s important to note that refinancing your home loan can have significant impacts and should be approached with careful consideration. In this guide, we’ll explain the potential advantages, concerns, and steps involved in refinancing.

We will cover:

  • The refinancing process
  • Reasons to refinance
  • Costs to consider.

The Refinancing Process

Although refinanced loans can vary significantly in size, term, and type, the process of finding and securing one is pretty much the same across the board.

Refinancing your mortgage typically involves the following steps:

  1. Find an adviser you trust: Partner with a financial adviser or mortgage broker who can help you understand loan types and what best suits your situation. Better yet, engage a Mortgage Mentor – they will guide you through the refinancing process with an eye on your long-term goals and reaching financial freedom.
  2. Compare home loans for the best fit: Don’t settle for the first offer you receive. Compare multiple factors such as interest rates, fees, and loan terms. Remember, the cheapest rate isn’t always the best option. Consider the overall package.
  3. Get your finances in order: Before applying, ensure your credit score is in good shape and gather all necessary documentation, such as income proof, tax returns, current mortgage information, property valuation, and any other relevant financial details.
  4. Check if you need current valuation: lenders may need a current valuation of your property to determine the loan amount and terms. This is especially relevant if you’ve owned the property for several years.
  5. Applying for your new loan: Once you’ve chosen a lender and negotiated the terms, submit your formal application. Be prepared to provide additional documentation and pay any upfront fees.
  6. Switching to your new loan: After approval, your lender will organise the settling of your existing mortgage and transferring of the funds. This usually involves legal paperwork and property title changes.

Reasons to refinance:

  • Saving on interest costs: While a lower interest rate can reduce your interest costs in the short term, at NZHL, we believe the structure of your home loan will make a bigger impact over time. The right home loan structure should make your money work better for you to reduce interest costs over the life of your loan.
  • Consolidating debts: Refinancing can allow you to consolidate your various debts into one streamlined mortgage, potentially simplifying your payments and reducing your overall interest cost.
  • Changing Loan Type: NZHL offers several loan options, including Managed Home Loans and Standard Table Loans, and Interest Only Loans. An NZHL Mortgage Mentor will help find the loan type that’s the best fit for you.

Costs and factors to consider:

  • Fees: Be aware of upfront costs like application fees, origination charges, and title insurance. Ensure the potential savings (or benefits) outweigh these expenses before making the switch.
  • Credit score check: Your credit score plays a crucial role in securing a new loan. A recent drop in your score could affect your eligibility or potentially lead to a higher interest rate.
  • Early repayment penalties: A fee you may be charged if you pay off your loan before the fixed-rate term ends. Factor these penalties into your calculations when considering refinancing.
  • Valuation costs: Refinancing may require a new property valuation, which can come with associated costs.
  • Legal fees: Legal fees can vary depending on the complexity of the refinancing process.
  • Cashback repayment: If you received a cash payment from your lender when settling your loan, you may be obligated to pay this back if you have not kept your loan for the agreed period. Know your obligations and factor this into your calculations.

The Bottom Line

Refinancing is a decision that requires careful planning and informed choices. Consider your current situation and long-term goals. As always, we recommend talking to a trusted mortgage broker or NZHL Mortgage Mentor to help you navigate the process.