Mortgage Refinance Calculator – FAQs

General Questions

What is mortgage refinancing?
Mortgage refinancing involves replacing your existing home loan with a new one, typically to secure a better interest rate, change loan terms, or access equity in your property.

How does this refinance calculator work?
Our calculator compares your current mortgage details with potential new loan terms. It calculates your potential savings by analyzing the difference in monthly repayments and total interest costs between your existing loan and refinanced options.

Why would I consider refinancing my mortgage?
Common reasons include:

• Securing a lower interest rate to reduce payments

• Switching from variable to fixed rates (or vice versa)

• Accessing home equity for renovations or investments

• Consolidating higher-interest debts

• Changing loan features or lenders

Calculation Questions

What’s the difference between “Lower repayments” and “Keep repayments the same”?

• Lower repayments: Maintains your current loan term but reduces your monthly payments due to the lower interest rate

• Keep repayments the same: Uses the savings from the lower rate to pay down your principal faster, potentially reducing your loan term

How is the interest saved calculated?
The calculator compares the total interest you’d pay over the remaining loan term at your current rate versus the new rate. The difference represents your potential savings.

Does the calculator include refinancing costs?
No, this calculator focuses on interest rate savings. Actual refinancing may involve break fees, application fees, and legal costs that should be considered in your decision. For detailed information about refinancing costs in New Zealand, visit the Commerce Commission’s mortgage refixing and refinancing guide.

Why are there two different monthly repayment amounts shown?
The calculator shows both your current repayment and the potential new repayment, allowing you to easily compare the difference and see your potential savings.

NZ-Specific Questions

What are typical refinancing costs in New Zealand?
Common costs include:

• Break fees (if on a fixed rate)

• Application fees ($500-$1,500)

• Legal fees ($800-$2,000)

• Valuation fees ($300-$800)

• Possible early repayment penalties

How long does refinancing take in NZ?
Typically 2-4 weeks, depending on the lender, your documentation, and whether you’re staying with the same lender or switching.

Are there any restrictions on refinancing in New Zealand?
Yes, lenders will reassess your:

• Income and employment stability

• Credit history

• Property valuation

• Current LVR (Loan-to-Value Ratio)

• Ability to service the loan

What’s the current LVR restriction for refinancing in NZ?
For owner-occupiers, most banks require at least 20% equity (80% LVR), though some exceptions may apply for existing customers. Learn more about LVR restrictions from the Reserve Bank of New Zealand.

Strategy Questions

When is the best time to refinance?
Consider refinancing when:

• Interest rates have dropped significantly

• Your financial situation has improved

• You’ve built substantial equity

• Your fixed rate term is ending

• You need to access equity

Should I choose lower payments or a shorter term?

• Lower payments: Better if you need cash flow flexibility

• Shorter term: Better if you want to build equity faster and pay less interest overall

How much should I save to make refinancing worthwhile?
As a general rule, aim for at least 0.5% – 1% reduction in interest rate to offset refinancing costs, depending on your loan size and remaining term.

Can I refinance if I’m on a fixed rate?
Yes, but you may face break costs. Calculate whether your interest savings outweigh these costs before proceeding. The Financial Markets Authority (FMA) provides helpful guidance on understanding your mortgage rights and obligations.

Technical Questions

Why does my calculated savings seem different from bank offers?
Banks may use slightly different calculation methods or include additional fees. Always get official quotes from lenders for accurate comparisons.

Does the calculator consider compound interest?
Yes, the calculator uses standard amortization formulas that account for compound interest, providing accurate repayment and interest calculations.

What if I want to change my loan term when refinancing?
This calculator assumes you’re keeping the same remaining term. If you want to change your loan term, you’d need to run separate calculations for different scenarios.

How accurate are the results?
The calculator provides close estimates based on standard mortgage formulas. For precise figures, consult with your lender or mortgage advisor.

Need Personalized Advice?
While this calculator provides helpful estimates, we recommend consulting with a registered financial advisor or mortgage broker for personalized advice tailored to your specific situation. You can find qualified advisors through the Financial Advice New Zealand directory.

Note: This calculator is for educational purposes only. Results are estimates and actual loan terms may vary based on lender policies and individual circumstances.