Before I answer that question it’s worth defining what ‘refinance’ actually means because it’s a word people use in different ways.
Some people use it to mean ‘change banks’. Usually because they’re annoyed with their current bank or they have this idea that another bank will offer a better deal.
Some people use it to mean ‘my fixed interest rate is about to expire, I need to do something about that’. Often this comes with a veiled threat to move bank, but for the most part, Kiwi’s suck at negotiating and they take what they’re given.
Some people use it to mean ‘my financial position has changed and I need to adjust my mortgage to suit better’. This can be about adjusting your setup so that you can pay your mortgage off quicker or park surplus funds, as much as it can be about creating breathing room by lowering your payments.
So, when you talk about refinancing, which one do you mean?
In most cases it’s all of them!
Yes you want a good rate and yes you want the loan to suit you, and yes if I have to move to get it then I bloody well will. Sound familiar? Yeah.
Here’s some things I’ve learned over the last decade when it comes to refinancing:
Screaming at the bank with steam pouring out your ears is a great way to get a crappy deal.
Kiwi’s are great negotiators when someone else does the negotiating for them.
The cash carrot most banks offer for moving is largely soaked up by legal fees.
The difference between 3.15% and 3.05% on a loan of $500,000 is just under $10 a week. If you really want to save money, stop buying so many flat whites.
Moving banks is an option, but it doesn’t always stack up.