IS REFINANCING AN OPTION?
Reasons to refinance are many and varied such as: Getting a lower rate; Choosing a
more secure deal; Making home improvements; Finding a flexible mortgage;
Consolidating debt; Buying a rental; Helping the kids onto the property ladder;
Raising some capital; Getting a better service; Becoming a mainstream borrower.
While refinancing could be the answer, you may well be able to re-jig what you
already have.
Better the devil…………..
To work out whether or not you should refinance or change mortgages, you should
look at the costs involved. Are there any break fees from your present mortgage?
Will a fresh valuation be required? How much will my solicitor charge me to
discharge one mortgage and take up another? Do I have to change my bank accounts?
Are there any fees in taking up a new mortgage?
Banks will often offer incentives for people to change over, such as legal
contributions to fees and no or low Lenders Mortgage Insurances. These offerings are
also available through a registered New Zealand Mortgage Brokers Association
(NZMBA) broker. Additionally they may be able to source quick, efficient and cheap
legal processes so that transferring lenders may not cost you any legal expenses.
Always work out (with the aid of an independent NZMBA broker) how much it will
cost you to move – and how much a new deal will save you over the long term. You
may find it is cheaper to stick with your existing deal and your current lender.
OK, but I have a 2 year fixed term but 3 and 5 years are cheaper
The cheapest interest rate may not be the best for you. If you want certainty over a
long period, then 3 to 5 years may be appropriate. Interest rates are at an extremely
high point in relation to historical trends. They won’t stay there forever. Remember
when they were all below 7%. Most current recommendations are to fix for 2 years,
in the expectation that in 2 years rates will have reduced considerably. (Note we
don’t expect decreases any time soo