The average new loan in New Zealand is worth $225,000, according to data from the Reserve Bank. With a 30-year loan term and a 4 per cent interest rate, you’ll pay over $160,000 in interest alone on a mortgage that size.
Reckon that’s a bit too much? So do we.
Refinancing your loan could be a great way to pay it off quicker and save money. Here’s how.
Could refinancing shorten your mortgage term?
Refinancing isn’t the best option for everyone with a mortgage, but it could be a good idea for you. In some cases refinancing will:
- Secure you a lower interest rate: over the life of some loans, interest paid is more than the principal amount. Reducing this cost could make it easier to pay your loan off faster.
- Allow you to make more repayments: by structuring your loan differently, and perhaps including a variable rate portion, you may be able to make extra repayments without incurring fees. This makes it easier to pay your loan off faster.
- Protect you against interest rate changes: if interest rates are expected to increase, fixing yours will keep you on a lower rate for longer, saving you money.
A small change now could save you thousands of dollars in the future, and allow you to be mortgage free sooner. For that reason, it’s worth chatting to a mortgage broker that you can trust to work out whether or not refinancing is right for you.
Is refinancing right for you?
Your mortgage should be tailored to your circumstances and your goals. When those things change, your mortgage should too.
With that in mind, there’s a good chance refinancing will save you money if:
- Your financial situation has recently improved. For example, if you’ve just received a pay rise at work or inheritance.
- You had less than a 20 per cent deposit when you purchased the property and have since increased your equity.
- Got an off-the-shelf mortgage, not tailored to your circumstances and goals.
- Want to pay your loan quicker.
If you want to find out more about refinancing, get in touch with the friendly team at PTR Mortgages soon for a no obligation chat about what’s right for you and your loan.