Refinance & Restructure Your Mortgage

A break fee (also called an early repayment charge) is a cost your lender may charge if you repay or refinance a fixed-rate loan before the fixed term ends. The fee compensates the lender for the interest they expected to earn. Break fees vary significantly depending on how much time is left on your fixed term, the difference between your rate and current wholesale rates, and your loan size.

In New Zealand, break fees can range from a few hundred dollars to tens of thousands on large loans with significant time remaining. However, they have reduced considerably in recent years as rates have risen. In some cases, the break fee may be zero or very small, especially if market rates have increased since you fixed.

We always calculate your estimated break fee before recommending a refinance. In many cases, the cash-back offered by the new lender, combined with the ongoing rate savings, far exceeds the break fee. We present the full picture so you can make an informed decision with no surprises.

One of the most important decisions when refinancing is how to structure your loan across fixed and floating rates. A fixed rate gives you certainty, as your repayments stay the same for the fixed period (typically 1-5 years). A floating rate is variable and can change at any time, but it offers flexibility to make extra repayments without penalty.

Many homeowners benefit from splitting their mortgage into multiple tranches, for example, fixing 70% of the loan for security and keeping 30% floating for flexibility. This approach lets you make extra repayments on the floating portion while knowing the bulk of your mortgage is locked in at a predictable rate.

We analyse your situation and recommend a structure that balances certainty with flexibility. If you are planning to sell, renovate, or make lump-sum payments in the near future, we factor that into our recommendation. Our goal is to ensure your mortgage structure matches your life plans, not the other way around.

When your fixed rate term ends, your loan rolls onto a new rate set by your bank. This is usually the bank's current advertised rate for the term you originally chose, or a floating rate if you do not actively refix. Many homeowners simply accept whatever rate their bank offers, but this is rarely the best deal available.

We recommend contacting us 2-3 months before your fixed rate expires. This gives us time to compare your bank's offer against the wider market, negotiate a better rate or cash-back, and arrange a refinance if a better deal exists elsewhere. Even if staying with your current bank is the best option, we can often negotiate a sharper rate simply by presenting a competing offer.

If you are not sure when your fixed rate expires, we can look it up for you. Once you are a Sunshine Mortgages client, we proactively track your rate expiry dates and reach out ahead of time so you never miss an opportunity to save.