When does it actually make sense to refinance or re-fix?

The question we get most is “should I refinance?” — usually after someone has seen a rate. That’s the wrong starting point.

Put everything into numbers. Compare the interest you’ll pay where you are with the interest you’d pay on the future deal. Then weigh what it costs to get there — break costs, cashback clawbacks, legal — against any new cashback coming in. The rate on its own is not the answer.

Sometimes staying put and re-fixing is the smarter move. Sometimes switching is. Sometimes the reason to move isn’t money at all. The job is to run that comparison properly, not to chase a headline.

Put it into numbers

If you’re still inside a fixed term, most New Zealand lenders will charge a break cost to get out early. That number is a calculation based on the remaining term and how wholesale rates have moved — not a flat fee you can guess from a blog post.

Cashback clawbacks sit in the same stack. If you took a cashback when you last fixed or refinanced, and you’re still inside the clawback period, some or all of it can come back off the table when you leave.

Here is a worked illustration. Say you have $500,000 remaining, with 24 months left on a 6.49% fix, and a 5.49% deal is on the table. These are example rates, not today’s market and not a named-bank special.

Using simple interest over those 24 months — so you can see the shape of the comparison, not a full amortisation:

Illustration	Rate	24-month interest
Where you are now	6.49%	$64,900
The future deal	5.49%	$54,900
Interest difference	1.00%	$10,000

$500,000 × rate × 2 years. Example only. A real loan statement will look slightly different because principal is reducing and interest is calculated daily.

Now put the friction in. For example: a $4,000 break cost, a $2,000 clawback (say $2,000 of a $3,000 cashback is still in clawback), legal of $1,600 (typical discharge-and-register work sits around $1,200–$2,000), and a $3,000 cashback on the new deal.

Line	Example $
Interest you’d save over 24 months	+$10,000
Example break cost	−$4,000
Example cashback clawback	−$2,000
Example legal (discharge and register)	−$1,600
Example new cashback	+$3,000
Net over those 24 months	+$5,400 ahead

In this illustration you are ahead by about $5,400 over the remaining two years. Flip any one of those lines and the answer can flip with it. A larger break cost, a full clawback, no new cashback, or fewer months left on the fix, and you can be behind.

These figures are examples, not today’s market. As at August 2026 they are for shape only. Break costs, clawbacks, legal, and cashbacks vary by lender and by your contract. We calculate yours from the loan statement, not from a rule of thumb.

Legal is always in the stack

Legal cost belongs in every refinance comparison. Moving banks usually means a solicitor to discharge the old mortgage and register the new one. Budget for it — say $1,200–$2,000 for a straightforward file, more if the structure is complicated.

Some banks have internal legal who can do that conveyancing for you — taking the loan across from the other bank, not just switching a product where you already are. When that is on offer, a big slice of the legal line can drop out of the comparison, or come down a long way. Ask. It changes the net number.

Sometimes the product is the reason — not the money

A tenth off the rate is not always why people move. The product can be the point.

• You have limited interest-only left at the current bank, and another lender will still do it
• You want EV or green loan terms that your current product doesn’t offer
• You want a proper offset, and you’re on a structure that doesn’t have one
• Even the bank app and day-to-day banking — if you actually live in the account, that friction is real

Those are not “nice to haves” if they change how you use the loan. Price them in. A slightly sharper rate on a product that fights you is not a win.

Sometimes bank policy is what stops you

The rate can be fine and you still need to move. Policy, not price.

Your next purchase. Another stretch of interest-only. Putting the loan in a company or a trust. Servicing rules that treat your income in a way that doesn’t match how you actually get paid. If the current bank won’t allow the thing, staying to save 0.2% is saving the wrong number.

Then the decision is about being allowed to do the thing — not about winning a rate bake-off.

Re-fix at expiry is usually cleaner

Re-fixing is staying with your current lender and locking a new term when a fixed rate rolls. No discharge. No new legal file. No cashback you have to repay because you left early.

Six weeks from expiry is a different conversation from eighteen months left. Close to expiry, break costs are often modest and a proper review is cheap insurance. A long remaining term can still be worth breaking — but only if the net number above is clearly ahead.

Don’t wait until the bank’s rollover letter arrives and then decide in a weekend. That’s how people get politely rolled onto whatever is on the shelf.

Talk through your numbers

Bring the latest loan statement — balances, rates, expiry dates, any cashback still in play. We’ll put your figures in the same stack as the example above and tell you, in ordinary dollars, whether a move is worth the hassle.

If staying and re-fixing is smarter, we’ll say so. If the new bank’s internal legal can take the conveyancing, we’ll put that cheaper legal line in the numbers. If the product or the policy is the real reason to move, we’ll say that too.