How I’m saving thousands by refinancing my mortgage

How refinancing your mortgage could save you thousands of dollars

 

Earlier this year I had one of my loans roll over (my mortgage is in 3 parts) and annoyingly, since interest rates had gone up since 2016, I wound up paying something like $20 a fortnight more. (Ish? I’m too lazy to go check.)

Such is life in NZ where we don’t have fixed rates for 30 years.

I refixed that loan for another year, and figured I’d look at a full refinance the same time next year when everything would come up for renewal.

But last month I refinanced it all to a new bank.

Why? So so much has been happening moneywise: a bit of which I actually can’t write about, the rest which I will get around to soon.

The main takeaway is, I’ll now be saving nearly $90 a fortnight, which is nothing to sniff at!

Between rates falling a bit in the past few months and the new bank offering a sharp deal, I start saving money right away. I got $3k cashback, which covered the break fees (just under $1000) and also the cash clawback.

The what?! Well, when I took out this mortgage back in 2016 they gave me $1200 in cash. Annoyingly, there was no paperwork outlining the conditions of this (I only have an email confirming the amount, nothing about the payback period). I would have assumed the clawback was proportional over time (as it is with the new bank – I made sure to get this down in an email this time), but no, they required the full cashback amount be paid back in full if I left early.

I’m slightly out of pocket right now due to the lawyer fees for the refinance process, but the fortnightly savings will quickly make up for that.

I’ve also now been able to set up the floating part of the mortgage as offset, so the positive balances in my accounts will reduce the amount of interest charged on that part of the mortgage. It’s not a huge amount right now (a few grand offsetting $25k). But early next year I expect to have a much larger lump sum come in (a topic for another future post) and sit around for a little while – and that will be handy.

Ever been through a refinance? How’d you find the process?

4 thoughts on “How I’m saving thousands by refinancing my mortgage

  • Reply Rohan August 7, 2018 at 21:12

    Nice work. Everyone needs to learn to shop around more with their mortgage. There are definitely some savings to be had. We were in the same situation earlier this year. And just for switching we pocketed over 5K and a better interest rate.

  • Reply Kara August 8, 2018 at 03:15

    We’ve gone through one refinance on our mortgage and found the process to be very easy thanks to our broker. The hardest decision was deciding whether or not to go with a fixed or variable mortgage, and for how long we wanted to lock things in for.

  • Reply GreenDollarBills August 15, 2018 at 07:25

    I was such a fool – I fixed for 5 years at 2.54% thinking that rates would go up. This was 3 years ago and they’ve gone virtually nowhere here in the UK. Well done for taking the opportunity!

  • Reply Funny about Money August 19, 2018 at 13:56

    My son and I refinanced a house we co-purchased twice: once at the bottom of the Bush Recession, when it looked like we might have to default, and then later my son refinanced to get my name off the loan and the title, after it became apparent he would never get another job in San Francisco that could support him comfortably and so he was pretty much stuck here in Arizona. Both times he managed these transactions through our credit union, so it wasn’t too much of a horror show. Just lots of time-sucking paperwork.

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