Time to refinance? 5 signs you could be paying too much on your mortgage
Your mortgage is never something you should simply “set and forget.” With interest rates, loan structures, and life circumstances constantly shifting, it’s important to check in on your home loan from time to time… because you could be paying more than you need to.
The term ‘refinancing’ simply means switching your current mortgage to a different structure, lender, or interest rate. It can be a smart way to save money, reduce stress, or free up cash for other goals.
So how do you know if now is the right time to refinance?
Your interest rate no longer stacks up
Interest rates in New Zealand are always moving, and lenders are constantly changing their offers. It's important to never assume your current lender is giving you the best deal. It always pays to compare providers!
If you locked in your rate a couple of years ago (especially while rates were a little higher), refinancing could help you:
- Access a sharper rate sooner
- Structure your loan to allow for quicker repayments
- Even negotiate with your current bank using competing offers and current deals
You’re coming off a fixed-term loan
Coming off a fixed rate soon? That’s one of the best times to review your loan. You’re not locked in anymore, which gives you flexibility to:
- Refix at a new rate and term
- Switch to a floating or split loan
- Refinance with another lender offering a cashback or better terms
A quick loan review before your fixed term ends could potentially save you thousands over the life of your mortgage.
Your financial situation has changed
Maybe you’ve had a pay rise, started a family, or taken on new expenses. Perhaps you're feeling the pinch with rising living costs. Your home loan should work with your lifestyle, not against it.
Refinancing could help you:
- Reduce your repayments by extending your loan term or moving to higher repayments
- Access equity for renovations, debt consolidation or investment
- Restructure your loan into a format that better suits your cash flow
You’ve built up equity in your home
As your property increases in value and your mortgage balance decreases, you build equity.
With more equity, you may be able to:
- Access lower interest rates
- Remove or reduce low equity margins
- Use that equity to fund a renovation or deposit on an investment property
You haven’t reviewed your loan in over 2 years
When was the last time you checked your mortgage details?
If it’s been more than two years, it’s time. The market has likely changed and likely so have your goals or situation. A simple review could reveal:
- Where you could score better rates elsewhere
- Smarter ways to structure your loan
- Opportunities to save money or pay it off faster
When you work with the mortgage advisers at Loan Market Queenstown, we will ensure we stay in touch with you throughout the life of your loan. We’ll offer plenty of chances for regular reviews and updates to ensure your loan is still working for you rather than against you.
So… should you refinance?
It’s important to note that refinancing can come with its cons, too. You may be subject to break fees if you break certain fixed terms early. Our team will help you compare your current loan and lending terms to what’s available on the market, and what is most in line with your long-term financial goals. We will run the numbers to see if it’s in your best interests to make the swap, taking into account any penalties.
Book your free loan review or get in touch today!