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How to refinance a home loan | Benchmark Mortgages

How to refinance a home loan | Benchmark Mortgages

July 3, 2023

Would refinancing your home loan make life easier?

Right now, refinancing is a hot topic. It’s likely that every New Zealander with a home loan is wondering if there’s a better deal out there in the lending world. There are rumours about unadvertised rates and the ability to negotiate a deal, but how on earth do you access these special offers?

If it’s crossed your mind to look in to refinancing - to pay less interest or get a more agreeable loan structure - this article is for you. Whether you’re coming to the end of a fixed term or you’ve rolled onto a new interest rate that’s hurting your household finances, we hope you’ll find some answers here.

What exactly is refinance?

Home loan refinancing in New Zealand is a process that allows you to replace your existing home loan with a new one, usually with a different lender. It can be a clever move if you want to take advantage of better interest rates, change the terms of your loan or consolidate your debts. Here’s how it works when rates are up, as they are right now:

·        Imagine your low interest fixed home loan is coming to the end of its term. You can either let it roll over onto the floating rate, which is hovering around 8%, or you fix it again for any period between six months and five years.

·        Whatever you decide, you’re looking at a big jump in interest. Your lender doesn’t seem particularly sympathetic, so you decide to explore refinancing with a different lender. This step will be easier if you get Benchmark Mortgages to help, because we have access to a wide range of lenders and exclusive offers.

If a potential new lender offers more favourable terms than your current lender – including optimised structure that looks after your budget and long term goals - you apply for a loan with them. This new loan is then used to pay off your existing loan in full. Essentially, you're trading in your old loan for a shiny new one

Why bother with the hassle of refinance?

The benefits of refinancing can be quite powerful. For example, if you secure a lower interest rate with a different lender, you could save a significant amount of money in interest payments over the life of the loan. You can either put the money towards becoming mortgage-free sooner or use it for household spending, to cope with cost of living increases.

 What’s more, refinancing can allow you to improve the structure of your loan. For instance, you might want to split your loan into two or three portions, putting each chunk on a different fixed rate. Or you might want to use an offsetting account, make an extra payment every now and then, or switch from monthly to fortnightly repayments.  

 Another reason to consider refinancing is to consolidate debts. If you have multiple loans or credit cards with high-interest rates, you can roll them all into one home loan through refinancing. This not only simplifies your finances, but can also reduce your overall interest payments.

Is there a downside to refinancing?

Refinancing your mortgage may lead to interest savings, but there could be costs involved. For example:

Break Fees: If you refinance before your current fixed rate term comes to an end, New Zealand law allows lenders to charge a fee to recover costs.

Legal Fees: Changing your mortgage requires working with a lawyer, which always costs money.

Valuation fees: If your new bank or lender requires a current registered property valuation, you'll need to pay for it.

Repayment of original mortgage incentives or rewards: Your original mortgage might have included perks like cash or home appliances, which may need to be repaid or returned.

If you're worried about these potential costs, we can help you to understand which of them would apply to you. Depending on the refinancing option you choose, some of the costs might be covered by your new lender.

Refinance made easier with Benchmark Mortgages

Navigating the world of home loans can be quite overwhelming. There are so many lenders out there, each with their own terms, interest rates and loan features. It can be a real challenge to sift through all the information and make sense of it. That's where we come in

Smoothing the way to smarter decisions

When you team up with Benchmark Mortgages, we guide you through the home loan maze. Our knowledge and expertise can help you to understand the different loan options available and pin point the best opportunity. Your Benchmark Mortgages adviser will explain the jargon, simplify complex terms and give you the confidence to make informed decisions.

We're connected to a wide range of bank and non-bank lenders

We work with a wide range of lenders. This means we can shop around on your behalf. It’s fair to say that we have access to some of the most competitive interest rates available.

Personlised advise that sets you up for success

Another fantastic benefit of working with us is personalised advice. Your Benchmark Mortgages adviser will take the time to assess your financial situation, goals and preferences. By understanding your unique circumstances, they can tailor recommendations specifically for you. It's like having a financial coach in your corner.

Help with your application

When it comes to the application process, we have an excellent understanding of each lender's criteria and preferences. This means we can help you to prepare your application, ensuring that everything is in order and submitted correctly. This can increase your chances of a smooth and successful refinancing process.

We're in your corner

Most important of all, your Benchmark Mortgages adviser works for you - not the lenders. Our primary goal is to help you find the best loan option that aligns with your needs and objectives. We act as your advocate, negotiating with lenders on your behalf to secure the best possible terms. It's like having a dedicated champion fighting for your financial well-being.

Talk to us about refinance

Ultimately, using Benchmark Mortgages to refinance your home loan in New Zealand can save you time, money and stress. Your Benchmark Mortgages adviser is your shortcut to knowledge, a wide range of lenders, personalised advice and negotiation power.  And our services cost you nothing, because we get paid by the lender you choose from the options we present.  Talk to Benchmark Mortgages today.

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