When to refinance your mortgage. (Spoiler: not often, but sometimes you really should).

There’s a bit of confusion about the pros and cons of refinancing home loans.

Every week, people get in touch and tell me their fixed-term loan is coming to an end, so can I look at refinancing?

In most cases, they don’t need to refinance. That could open a great big can of worms.

What they need to do is complete a review with us. It may involve looking at the fixed rates on offer and then choosing the fix that’s right for them.

By contrast, refinancing means changing to a new lender. You’ll be moving your mortgage to a new bank – and that’s a big deal these days.

Are you ready for the bank to probe all your finances?

Refinancing in 2024 requires a full application where the bank will dig into your personal life to analyse all your spending. Your ability to repay a home loan will

be subjected to an exhaustive stress test.

For instance, the bank will look at the credit limits of all your cards, not just the outstanding balances. They will check to see how much you’re paying into

Kiwisaver. 

School fees? Child support? Family trusts? They’ll want to know about those too.

All lenders are obliged to gather this information because they’ve signed up to the Responsible Lending Code. This was created because the government

wanted to limit the ability of borrowers to overload themselves with debt.

With this in mind, you need to think hard before submitting to the rigmarole of a new loan application (and possibly being declined). If you simply need a new fix, we can work out the details when you complete your loan review.

However, there are always exceptions to the rule.

High inflation has changed the game for many people.

2023 was a year when consumer prices leaped ahead. Many borrowers found their monthly budget came under pressure, with groceries, utilities and other

items taking a much bigger bite out of household income.

2024 looks like more of the same.

On top of that, the banks have tightened their lending criteria, so it may not be possible to obtain or roll over an interest-only loan. In this case, your interests

might best be served by refinancing with a different lender.

This is a decision that can only be made on a case-by-case basis. We will work with you to see what’s possible, check your requirements, and give advice based

on your individual needs and goals.

If the sums make sense, we’ll work hard to put together a new mortgage application. It might be a bit of a slog – but it’s worth it.

What’s in it for us? Maybe not much.

If you decide to refinance, we will earn commission from the bank.

If you simply refix, we will make much less money. Maybe zero dollars or a small fee.

And that’s fine, because we want to make sure that moving to another lender is the right decision for you. That has to be the focus.

At Sue Tierney Mortgages, we are not motivated by short-term fees. Instead, we want you to receive advice that matches your needs and goals. It’s a long-term

view of financial wellbeing that we’re 100% committed to. 

So please get in touch when it’s time to refix (or possibly refinance). Don’t just click on the link in a bank email urging you to ‘Refix Now’ or ‘Grab This Great Rate.’ There may be better options, and we’ll help you find them.   

Our mortgage advice costs you nothing, and we will always act in your long-term interests.