When & How to Refinance a Mortgage in New Zealand
When you first bought your property, you probably signed up for a long-term mortgage. It is common to have a mortgage with a repayment period of 20 to 30 years. That is a very long time. In those years a lot can happen to your personal situation and to the economy. You could have gotten a raise. You could have had a medical situation or other event that caused debt to grow. Further, the economy could have changed and affected the interest rates across New Zealand. Any of these reasons could make you stop and think about your mortgage rate. If you want to know what to do about it, then take a look at what a mortgage broker could help you accomplish in a refinanced mortgage.
What is a refinance mortgage action?
You mortgage that you have with your current bank is a legally binding repayment contract. The basic premise is that because you didn’t have enough money to pay the prior owner in full, you need to borrow money from the bank. The bank fronts the entire sale price in exchange from a promise to pay from you. If you don’t pay, the bank gets your house. Generally, these mortgages outline all of your responsibilities for monthly mortgage payments. You can pay it off in full if you like early, or you can pay the standard installments until the final month.
However, you could say, get another bank to payoff that mortgage, and then you would start paying that second bank the mortgage. Usually, you can get a better deal under the new negotiating terms. The second bank buys out the first bank. Based on the terms you could lower your monthly payments, lower your interest rates, or even decrease the number of months the loan is for. All a refinance mortgage, New Zealand, NZ, action does is let you re-negotiate your mortgage under new terms, hopefully better terms.
What are the benefits of a refinance mortgage action?
You need to know that it is worth the cost. A refinance mortgage, NZ, negotiation costs money. However, if you still have a significant number of months left on your original mortgage then a refinance plan could be a massive benefit and you could save thousands in interest payments.
Pay Less Per Month with A Lower Interest Rate
Say your interest is currently 5%. After 30 years of mortgage payments, with this interest rate you end up paying about twice what you bought your home for originally. However, if interest rates drop, you could save money by refinancing the mortgage at a lower interest rate. Assume that your mortgage of 5% is 10 years old. We will take the time and find you the best option, which may not only cut the rates from bank to bank, but we can also help to find non-bank client refinancing, which maybe even better. If you refinanced the mortgage on your New Zealand property at 2.5% for another 30 years, there is a good chance that you could decrease your monthly payment by a third. What would you want to do with that extra money?
Reduce the Term of Your Mortgage
Alternatively, you could choose to keep your monthly mortgage payments the same. If you can afford to pay your current mortgage rate, you don’t have to sign up for another 30-year terms. Think of it this way. If you have 20-years left on your mortgage and interest rates drop, you may not want a new mortgage for another 30-years. However, you could negotiate a 10-year or 15-year refinanced mortgage. This would mean, if you have 20-years left on your original mortgage, and rates drop, you could keep your current payment and fix it so you only had 10 or 15-years left to pay everything off.
Switch from A Floating Rate to A Fixed Rate
Often people like to play the field with the mortgage rates when they buy their first home. This can play to their advantage if they have a floating rate mortgage that changes with the season. However, if rates start to climb, you may want to jump ship. If this is the case, you could switch to a fixed rate mortgage through a refinancing mortgage action. This will allow you to have a predictable monthly payment.
New Zealand’s Cash BackWatch Out for Costs and Other Risks
In NZ, when you receive a mortgage from the bank, the bank will offer, as a benefit to all of their borrowers, “cash back,” the cash back is calculated based on a certain percentage of the loan amount; this can be upwards of a couple of thousand dollars, it’s total is variable depending on the bank, budget, and current country’s economy. This cash back is intended to cover your refinance costs like lawyer fees, etc.It does cost money to do a refinance mortgage action in New Zealand. However, as long as the terms are beneficial, and you have time left on your original mortgage you will still earn money. A mortgage broker will be able to help you decide on the best terms for your personal situation and mortgage life.
Other Refinanced Mortgage Benefits to Consider
If you have paid off half of your house, you have equity that is just sitting there. If you want to refinance you could use that equity for something. You aren’t restricted to refinance only what you have left on the mortgage. If you refinanced a mortgage at the full ability and value of the property you would be getting a check for the difference. This money could be put towards paying off credit card debt, medical bills, paying off school loans, flipping into property investment, or redesigning a kitchen, bathroom, or outdoor living area. The world is at your disposal. As long as you are financially responsible about the monthly payments and term of the new refinanced mortgage, you could use the money for enjoying your life and caring for those around you.
Work with A Mortgage Broker For The Best Terms
Remember that you don’t have to negotiate all by yourself. Banks only want to make money and can’t offer the rates that you may get elsewhere. Because of this, you need a mortgage broker that can research where the best refinance mortgage rates are, build an offer, and negotiate the best deal for your needs, wants, and desires. Don’t wait, though, mortgage rates continually go up and down and are never stagnant. You need to strike quickly. A mortgage broker can act fast and fight for you when you need it the most. Don’t pay all of your savings to a bank in interest, instead, refinance that mortgage and keep the difference for yourself. You deserve it.