Most home loans in New Zealand are split into fixed-rate portions that come up for renewal every so often, and when that day arrives you have a decision to make. You can refix, which means staying with your current lender and locking in a new rate, or you can refinance, which means moving your whole loan to a different lender. They are easy to confuse because both happen around the end of a fixed term, but they have very different effort, cost and reward. For a family that simply wants the security of a steady home, getting this right means lower repayments and less stress. Here is what each one means, when to consider switching, and how break fees and cashbacks really work.
Quick answer
Refixing is staying put. When your fixed term ends, you choose a new fixed (or floating) rate with the same lender, usually with a quick online or phone confirmation and no new application. Refinancing is moving on. You take your mortgage to a new lender, which means a fresh loan application, a property valuation, a solicitor to handle the discharge and the new registration, and often a cash incentive from the new bank to win your business. Refixing is fast, free and low-effort but you only get your current lender's rates. Refinancing is more work and has some costs, but it lets you shop the whole market for a better rate, a cashback, or features that suit you better. Many people refix most of the time and refinance occasionally when the gap between lenders is big enough to be worth the move. A licensed mortgage adviser can run the numbers for your situation at no cost to you, because advisers are usually paid by the lender.
The detail, in plain English
When a fixed term is ending your lender will usually contact you with the rates you can refix onto. Refixing is the path of least resistance: you compare the offered terms (six months, one year, two years and so on), pick one, and confirm it. There is no valuation, no legal work and no fee, and your repayments simply adjust to the new rate. The catch is that you are only seeing one bank's pricing, and the advertised rate is not always the sharpest one available, so it is worth asking your lender to match a better deal before you agree. Refinancing is a bigger move. You apply to a new lender as if you were a fresh borrower, they assess your income, your other debts and the property, and your lawyer arranges to repay and discharge the old loan and register the new one. The reward is competition: a lower interest rate, a cash contribution (a lump sum the new bank pays you, often a percentage of the loan, to cover your moving costs), or better features such as a generous offset or revolving credit facility. The cost side has two main parts. First, a break fee may apply if you move a fixed loan before its term ends, because the bank loses the interest it expected, and that fee depends on rates and how much time is left, so always ask for it in writing. Second, there are setup costs like the new lender's legal and valuation fees, though a cashback often covers these. Refinancing usually only makes sense at the end of a fixed term, when there is no break fee, and when the savings clearly beat the effort and any costs. A whole-of-market mortgage adviser can compare lenders for you and tell you whether refixing or refinancing wins.
What it means for you
Your mortgage is almost certainly your largest ongoing cost, so the choice between refixing and refinancing is really a choice about how much breathing room your household has each month. If your current lender's renewal rate is competitive and you value simplicity, refixing keeps things steady and takes minutes. If the wider market is noticeably cheaper, or another lender is offering a meaningful cashback, refinancing can free up real money that goes back into your family and your home. The smart habit is to never just accept the first refix rate by default. A few weeks before your term ends, check what other lenders are offering, ask your bank to match or beat it, and weigh any cashback against the legal and valuation costs and any break fee. Doing this every renewal, rather than letting it roll over on autopilot, is one of the simplest ways to protect the home you have settled into. If you are also thinking about buying or selling at the same time, line up your finance decision with that move so you are not breaking a fixed term at the wrong moment.
Common questions
Is refixing free? Yes, staying with your lender and choosing a new rate has no fee, no valuation and no legal work. Does refinancing cost money? It can, mainly the new lender's legal and valuation fees, but a cashback from the new bank often covers them, so compare the net result. What is a break fee? It is what your bank may charge if you exit a fixed rate before its term ends, because it loses expected interest; it varies with market rates and time remaining, so ask for the exact figure in writing. How long does refinancing take? Allow a few weeks for application, approval, valuation and the legal switch, so start before your fixed term ends to avoid a break fee. Can I negotiate my refix rate? Yes, lenders will often match or beat a competitor's offer to keep you, so it is always worth asking. Do I need a mortgage adviser? You do not have to use one, but a licensed whole-of-market adviser can compare lenders for you, usually at no cost, and tell you which option wins.
Your next step
If your fixed term is coming up, do not let it roll over without a look around. Compare your lender's refix offer against the wider market, ask for a better rate, and weigh any cashback against the costs and break fee before you decide. If you are weighing this up alongside a bigger move, our guide to fixed vs floating mortgage rates explains how to structure the loan itself, and our overview of mortgage and finance help shows how the pieces fit together. When you want someone in your corner, we can match you with a licensed mortgage adviser to run the numbers for free and with no obligation, so the home you have worked for stays comfortably within reach.
In plain English: In plain English: refixing means choosing a new rate with your current lender (fast, free, no application), while refinancing means moving your loan to a new lender for a better rate or cashback (more work, possible break fee and setup costs). Compare both at the end of each fixed term, ask your bank to match a better deal, and a licensed mortgage adviser can run the numbers for free.
General information, not personalised real-estate, legal or financial advice. Confirm your situation with a licensed adviser. Read the full disclaimer →