Refinancing Your Mortgage in NZ — A Step-by-Step Guide

Refinancing Your Mortgage in NZ — A Step-by-Step Guide

Refinancing means paying off your existing home loan with a new one, usually from a different lender. Done well, it can shave real money off your repayments. Done badly, it can cost you thousands in a break fee and lock you into a rate that looked good for one year but not for four.

The most surprising thing we found is the direction of break fees. If rates have fallen since you fixed, breaking that fixed term can be expensive. If rates have risen since you fixed, the break fee is typically zero or negligible. Plenty of borrowers assume the opposite, and it changes the whole maths of whether refinancing is worth it.

There is also a cashback trap. A lender might offer a lump sum to win your business, but every cash contribution carries a clawback period. Refinance away, sell, or fully repay inside that window and you repay some or all of it. The cash is not free money — it is a commitment.

How We Researched This Guide

We built this from primary sources rather than other people's summaries. The lending rules come from the Reserve Bank's LVR and DTI pages, the tax material from Inland Revenue, and the consumer-side detail from settled.govt.nz and Consumer Protection. The conveyancing section relies on the Lawyers and Conveyancers Act 2006, set out in full on legislation.govt.nz, which is worth reading if you have ever wondered whether you need a lawyer or a conveyancer.

Our rate figures come from our own mortgage table, populated daily, which we read on 16 September 2026 — 268 rate rows across the lenders we track. One thing that surprised us: the same table contains subsidised products such as energy-efficiency top-ups sitting in the same term buckets as standard home loans, with headline rates far below market. We have been careful not to quote those as mortgage rates, and you should be sceptical of anyone who does.

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The Quick Summary (60-Second Version)

If you only read one part of this guide, read this.

• Check your break fee before anything else. If rates have fallen since you fixed, it can be large enough to wipe out the entire benefit of moving.
• Run the comparison over the full remaining fixed term, not one year. A saving that looks good annually can vanish once the break cost is included.
• Cashback offers of roughly 0.5% to 1% of the loan come with clawback periods commonly in the two to four-year range. Measure the cash against the rate difference across those years.
• LVR and DTI rules are speed limits on banks, not entitlements for you. A bank can still decline an application that fits inside them.
• You can use a lawyer or a licensed conveyancer. Both are qualified to transfer property title, and a refinance is usually the cheapest conveyancing job you will ever pay for.
• Ask for an itemised quote separating professional fees from disbursements. It is the single most useful thing you can do when comparing firms.

Step One: Work Out What Your Current Loan Actually Costs You

Start with the paperwork. You want your current rate, whether it is fixed or floating, when any fixed term ends, the remaining balance, and the remaining term. Then ask the lender directly for a break fee quote — also called an early repayment cost.

Under the Credit Contracts and Consumer Finance Act you can repay a loan at any time, and the lender may charge for the costs that result. The charge must be a reasonable estimate of the lender's actual cost, and the contract has to set out that it may be charged and how it will be worked out. What drives it is straightforward: the lender loses money if rates at the time of early repayment are lower than your loan rate, because it cannot re-lend those funds at the same rate.

You cannot calculate this yourself. The inputs and formulas vary by lender and are not published. Quotes are typically valid only a few days because wholesale rates move daily. Get the number in writing before you go any further.

What Our Rate Table Showed

On 16 September 2026 our table showed a clear pattern: shorter fixed terms were priced below longer ones. The median one-year rate across everything we track was 5.15%, the two-year median was 5.49%, and the three, four and five-year medians sat higher again. The floating median was 6.39%. Main bank advertised specials ran roughly 4.99% to 5.85% for one year.

Step Two: Add Up the Real Costs of Moving

Refinancing is not free, and the fees are where most people's arithmetic falls over. Here is what we would expect to see quoted.

That low equity margin deserves a closer look, because it is not small. On a $600,000 loan, a 0.75% per annum margin costs about $4,500 a year in extra interest. That is an illustration of the principle rather than a quote from any lender, but it shows why the margin matters more than most of the one-off fees.

Some lenders do not label a margin at all and instead price low-deposit lending through a higher standard rate. Others use a one-off premium charged as a percentage of the loan. The margin is not automatically removed either — lenders generally want evidence your equity has reached their threshold, through repayments, a higher valuation, or both.

Where the Cashback Fits

Published material commonly puts a cash contribution at around 0.5% to 1% of the loan amount. Every one carries a clawback period, commonly two to four years. Lenders differ on how the repayment is worked out — some step it down at milestones, others calculate it daily on a pro-rata basis.

Clawback is generally triggered when the facility is closed or discharged in full, most commonly by refinancing to a different lender or selling without porting the loan. The honest framing is that a cashback is not free money. Compare the rate difference across the clawback period against the cash paid.

Step Three: Apply, Settle, and Check the Structure

Most borrowers use a broker, and for a standard residential loan the borrower usually pays nothing because the lender pays the broker. The FMA is clear that commissions vary across lenders and that this could influence which loans get recommended, which is exactly why advisers must disclose how they are paid and prioritise your interests.

Published disclosure statements from advisory firms put upfront commission at roughly 0.55% to 0.90% of the loan value, with trail commission from 0% to about 0.15% of the remaining balance each year. If your loan ends or moves within a certain period, the lender may recoup that commission, and the adviser may then charge you a fee. Ask about clawback up front.

Once approved, the legal work is genuinely simple. A refinance is one of the cheapest conveyancing jobs there is. You can use a lawyer or a licensed conveyancer — both are qualified to transfer property title, and the real difference is scope, not competence. A conveyancer specialises in property; a lawyer can also advise on trusts, relationship property and estate planning.

After settlement, check your new repayment schedule and whether extra repayments are capped. If you consolidated debt into the mortgage, the refinance only works if the habits that created the debt change.

Questions You Might Have

Will refinancing hurt my credit score?

A lender will run a credit check as part of any application, and multiple applications in a short window can leave marks. The practical approach is to do your comparison first, shortlist properly, then apply once. Shopping around for quotes is not the same as applying, and it should not affect your score.

Can I refinance if my property value has dropped?

Possibly, but your loan-to-value ratio will have risen, which can push you above the 80% line. That is when a low equity margin may apply, or a higher standard rate. The Reserve Bank permits only 25% of a bank's new owner-occupier lending to sit above 80% LVR, so a bank can decline even an application that fits inside the speed limit.

How long does the whole process take?

Allow a few weeks from application to settlement, though the legal side of a refinance is quick once the new lender is ready. The slow parts are usually the valuation, if one is required, and getting your break fee quote confirmed. Start the conversation before your fixed term ends rather than after.

Is a cashback worth switching for?

Only if the rate stacks up across the full clawback period. A slightly worse rate with a cashback can easily cost more than a better rate without one. Multiply the rate difference by your balance across the years you are committed to stay, then compare that with the cash on offer.

What Matters Most

The break fee decides most refinancing questions, and it is the one number you cannot work out yourself. Get it quoted in writing before you do anything else. If rates have fallen since you fixed, that figure may be large enough to make the whole exercise pointless — and if rates have risen, you may be walking away for nothing.

Then run the comparison honestly. Total costs, including legal fees, any low equity margin and the break fee, against the rate saving measured across the full remaining fixed term. Not one year. The full term.

Cashbacks are the last piece, not the first. They are real money, but they buy your commitment for two to four years, and the rate you accept to get one is what you actually live with.