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Should I Refinance My Mortgage?

28 May 2020

What topsy-turvy times we live in. There is real truth in the old adage that the only constant in life is change. 2020 has been quite unlike any other year before it due to the global effects and implications of COVID-19.

Of course with great change and upheaval comes new ways of doing things and new opportunities.

One very real impact of the Covid-19 pandemic is the downward pressure this has placed on mortgage interest rates. Prior to Covid-19 New Zealand and many countries around the world were already experiencing some of the lowest lending interest rates that the world had even seen. Who remembers interest rates of 8-9% in the late 2000s, or interest rates of 14 to 20% in the 80s and 90s? How times have changed! Some banks are now offering special rates below 3% per annum. It seems that borrowing money has never been cheaper.

Think before you borrow

Of course there are many dangers with “cheap money” especially if someone’s underlying personal and financial circumstances have or could take a hit due to the fallout from COVID-19. Nonetheless, there will be many people considering whether the time might be ripe to refinance your mortgage lending to take advantage of a lower interest rate.

There is no “one size fits all” approach and we are not financial advisors. If you are contemplating refinancing your mortgage then we recommend you do your homework, consider possible break costs versus potential savings, and speak with your mortgage broker or bank about what might be open and available to you. You should also check out things such as any fees to set up a new loan, whether you will have to file a detailed loan application, whether loan approval terms have changed and any contributions that a bank may be willing to make towards your legal fees.

Seek specialist advice before borrowing


You need to be very careful breaking a mortgage with one bank to chase a cheaper rate at another bank if your financial circumstances have recently changed (or could in the near future) because you could find that any changed financial position may disadvantage you in any new application. Sometimes it might be better to stay put.

The key with any change you might contemplate with your lending is, do your homework to find out where you stand, what is available out there to you and what is best for your circumstances. You should also speak with your trusted professional advisors before you leap into breaking your current home loan and interest rate. Break costs can be an unknown and most unwelcome cost for borrowers who have a fixed term loan with a number of years left to run.

Not sure who to ask?

We work with a number of excellent financial advisors and mortgage brokers and can put you in touch with experts who had can add real value to you and your family if you are thinking of refinancing to take advantage of the current interest rates on offer.

If you’re wondering about whether you could benefit from refinancing contact the team at Godfreys Law.

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