Record-low interest rates offer New Zealanders an opportunity to pay off their mortgage faster, and possibly save thousands of dollars over time.

What you may not know is that there are different ways to achieve this goal – but not all of them are right for everyone’s individual situation. And that’s why we are here. A SHARE mortgage adviser can point you in the right direction, helping you understand the pros and cons of your choices.

So let’s start with the key things to know, to shift the conversation into gear.

Refixing

Great news for borrowers – mortgage rates have never been lower. So if you are on a variable-rate home loan or your fixed rate is about to expire, now could be a good time to look at refixing.

Pros of refixing. By fixing at a lower rate, you can obviously reduce your regular payment amount and free up cash for other expenses. But as tempting as paying less each month might be, choosing a lower rate while maintaining (or even increasing) the amount you already pay can be a good way to cut years off your loan.

Some lenders allow you to pay a little extra, even on a fixed-mortgage. Others may charge you a break fee. Contact your SHARE adviser to make sure refixing is for you.

Cons of refixing. Depending on your needs and goals, refixing may not be the right option for you. For example, if getting a better rate means you need to break your current fixed-term mortgage, make sure the break fee doesn’t exceed the interest savings you intend to gain. Also, if you’re planning to sell your house soon, fixing for a short time might be best. Be sure to talk to a SHARE adviser to explore your options.

Refinancing

A mortgage is a long-term financial commitment, and a lot can change over the years – in the property market, in the lending landscape, in your financial life. And in some cases, switching to a new mortgage (refinancing) can be worth considering.

Pros of refinancing. Refinancing means taking out a new home loan – under better terms, with the same lender or with a different one – to replace the original mortgage. You might choose to refinance to get a better rate, to access the equity in your property, to shorten the loan term, or for debt consolidation.

Many borrowers are using a home loan refinance to take advantage of lower interest rates, but ‘cheapest’ doesn’t always equal ‘best’. A SHARE adviser can help you find a mortgage that offers the most competitive mix of rates, flexibility and fees.

Cons of refinancing. There are some negatives to refinancing a mortgage, and closing costs are one of them. Depending on your existing agreement, there might be penalties and fees involved, which could offset your potential savings.

Generally speaking, refinancing is not an easy decision, so make sure you get advice about your specific circumstances: for example, your existing and prospective lenders, your current credit score, and how soon you plan to sell your home. Talk to a SHARE adviser – we can help you weigh all options before making a move, as well as negotiating the most competitive terms with the lender on your behalf.

What about floating?

If your fixed-rate period is ending soon, securing a better rate is probably high on your list. However, a mortgage isn’t just about the rate – the mortgage structure matters a lot, too.

In the current environment, it can be easy to fall for the lowest rate and fix too soon. So take your time and think about your priorities. If your income has increased or you have received a bonus, you may want to consider paying a lump sum off the loan balance before refixing, when your loan is on a variable rate. This should lower your interest charges and help you build more equity in your property, with no early-repayment fees or charges involved.

We’ve got your questions answered

Fixed or floating? Refixing or refinancing? How much can I actually save?

Our SHARE advisers can help you answer these and other questions and take advantage of the most competitive rates and terms on the market.

Click here to find a SHARE mortgage adviser near you.