Long read · 6 min · 26 April 2026
Refinancing in NZ — when it actually saves you money
How to tell whether changing lenders is worth it once cashback, break costs and rate differentials are properly counted.
Every few months a Stuff or RNZ headline tells you that 'switching lenders saves $X a year' — but the actual maths depends on cashback offers, break costs on your existing fixed term, the rate differential, legal fees, and the term you fix into. Here's how to do it honestly.
Three things that move the answer
- Cashback offers — currently $1,500–4,000 from most banks for new mortgage business, conditional on minimum loan size and 4-year clawback if you leave early.
- Break costs — if you're mid-fixed-term and rates have moved against the bank since your fix, breaking can cost thousands. If rates have moved your way, break cost is minimal.
- Rate differential — the actual rate difference between current and new lender on the term you'd fix. 0.05% on a $700k loan is $350/year — small.
When refinancing is almost always worth it
- You're at the end of your fixed term anyway (no break costs at all)
- You're 12+ months into a fixed term where rates have *fallen* since you locked in (low or zero break costs)
- Cashback covers your legal fees plus a meaningful margin
- You have a specific reason — equity release, debt consolidation, change of circumstance — that needs the loan restructured anyway
When it usually isn't
- You're 6 months into a 3-year fix and rates have risen — break cost likely eats years of savings
- Loan balance under ~$300k — cashback typically scales with size, and small loans don't move enough on rate to offset legal/admin
- You have under 4 years left on your loan term — clawback period may exceed your remaining loan
What a broker does for refinancing
They'll get you indicative cashback and rate offers from 4–6 banks, factor in your break cost, and tell you the all-in net benefit (or net cost) over the new fixed term. They make money from the new lender on the new application — typically equivalent commission to a new purchase. Their incentive is to actually move you, but a good broker will tell you when staying put is the right answer — they want repeat business.