The ins and out of refinancing mortgages & how to survive the process

Please note, this article does not constitute legal or financial advice and may not apply to your personal circumstances. Prior to entering into any transaction, we recommend that you seek legal and financial advice.

Many homeowners are faced with refixing their mortgage to a higher interest rate once their current rate expires. It is overwhelming going from an interest rate of 2.39% to refixing at 6 or 7%.

More than half of ANZ's mortgage holders have a loan at 2 or 3% that will soon end. This will constrain some households’ finances. You have a loan of $500,000.

The interest rate has increased from 2.49% to 6.49%. As a result, your monthly payments have increased from $1,973 to $3,157. You will need to pay an extra $1,184 per month towards your mortgage – almost $300 extra per week.

Refix vs. refinancing

In New Zealand, people often use two words when dealing with mortgages: refixing and refinancing. These words are important when you own a property.

What is refixing?

This is when you change the rules of your mortgage loan, usually when the fixed interest rate ends. You promise to stick with one lender for a set time and get a steady interest rate. Usually, this rate is lower than the one that changes. This is an opportunity to take advantage of lower interest rates but also to modify repayment structures or consolidate debt.

What is refinancing?

Refinancing means switching to a new lender. People do this to get lower interest rates, change how they pay back their loans or combine debts. Sometimes the new lender gives you money back to cover the cost of refinancing.



If you get a new mortgage, the lender will do some financial checks and procedures again. This includes checking the value of the property, your credit history, and the terms of the loan. The lender needs to assess the risk level in lending you the money – prior to approving the loan.