Re-fixing your loan - BNZ (2024)

FAQs

Re-fixing your loan - BNZ? ›

Perhaps your income has significantly increased, or you're looking to borrow more to buy a new house or investment property. “BNZ lets you lock in a new rate up to 60 days before your mortgage rolls over,” says Simon. Just be aware that a ratelock break fee and early repayment charge may apply.

Perhaps your income has significantly increased, or you're looking to borrow more to buy a new house or investment property. “BNZ lets you lock in a new rate up to 60 days before your mortgage rolls over,” says Simon. Just be aware that a ratelock break fee and early repayment charge may apply.

When you apply for your home loan, one of your key decisions is to choose a fixed interest rate, a variable interest rate, or a combination of both. Throughout the life of your home loan, you'll have the opportunity to switch between a fixed or variable interest rate, or to switch to a split rate home loan.

The money in your redraw facility counts against the balance of your home loan, which lessens the amount of interest you pay. It's effectively a pool of funds comprising your extra repayments that sits in your home loan account on top of the balance.

If you want to make changes before the end of your term, you can renegotiate your mortgage contract. This is also known as breaking your mortgage contract. You may want to break your mortgage contract if: interest rates have gone down.

Most mortgage lenders allow you to apply for a product transfer up to 6 months before your current deal ends (or at any time if you're already paying your bank's SVR - Standard Variable Rate). So, you can get a quote today (either fixed or tracker) and have up to 6 months to decide whether to take it.

Don't assume you need to wait until your current deal ends before you get the ball rolling. Start the remortgage process early - around six months before your existing deal ends.

Refinancing will hurt your credit score a bit initially, but might actually help in the long run. Refinancing can significantly lower your debt amount and/or your monthly payment, and lenders like to see both of those. Your score will typically dip a few points, but it can bounce back within a few months.

Fixed-rate mortgages give you peace of mind.

This makes it easier to plan your budget and keep up with your repayments. You will pay the same amount until the end of the fixed rate period. You can then choose to re-fix your loan, which lets you take advantage of your lender's new fixed interest rate.

Is redrawing on a loan bad? ›

The temptation to redraw from extra loan repayments may be too much for some. This could mean unnecessary spending and will both lessen your ability to redraw and your savings on interest in the future. Redraws should be reserved for emergencies and larger financial decisions.

A redraw facility offers an effective way to save as it reduces the principal and interest you'll be paying in the long run. The interest rate on your mortgage is bound to be much higher than any interest earnings you could potentially make in a savings account.

In the most simplistic explanation, the balance stored in your redraw facility is transferred to your new loan when you refinance. You will still have access to the funds you have accumulated in this facility, but now you might have to pay a slightly higher interest rate on the amount that you have drawn down on.

For Fixed rate mortgages, the prepayment charge will be the greater of 3 months interest or interest for the remainder of the term on the amount prepaid calculated using the interest rate differential. For variable rate mortgages, it is 3 months interest.

All lenders will permit early termination of a fixed-rate loan. However, in the vast majority of cases, they will not waive any associated fees. A lender will refer you to the terms and conditions of the fixed rate in your formal mortgage offer.

Be advised as well: Refinancing or breaking a fixed-rate mortgage to switch to a new loan product also comes with additional costs attached, just as when applying for a first mortgage. Doing so means having to go through a background and credit check and having to pay appraisal, inspection and title fees again.

Theoretically banks have every right to call loans anytime, practically arbitrarily, as stated in the loan facility letter. In reality, loan recall is extremely rare so long as one repays on time and fulfils the terms of agreement.

Bank of New Zealand (BNZ) recently confirmed a time limited offer of 4.99% for one-year fixed-term home loans, for new loans that are brought to the bank by mortgage advisers.