3 Times Refinancing Your Mortgage Doesn't Make Sense
From Aaron’s YouTube: “3 reasons Why you should NOT refinance your mortgage in New Zealand because I know you are seeing”
Video not loading? Watch it on YouTube
Posted 2 January 2026
The short version
- Your current bank may already offer the best terms (like offset accounts or discounts) for your situation.
- Cashback offers often get eroded by break fees, clawback periods, and legal costs.
- Extending your loan term back to 30 years when refinancing can add decades of extra interest.
- A smaller retention payment from your current bank may be better value than a refinancing rigmarole.
Your bank might already be the best fit
Before jumping ship for a refinancing deal, check if your current lender still suits you best. Some banks offer unique perks like offset accounts or loyalty discounts that others can't match. If your bank's existing features align with your financial goals, refinancing could just create unnecessary paperwork for little benefit.
Aaron notes that many homeowners assume refinancing is always an upgrade, when often 'they might just be the best bank for you.' A quick review of your current terms could save you time and stress.
The cashback illusion
While a $9,000 cashback on a $1M mortgage sounds tempting, Aaron breaks down why it's rarely that simple. Break fees (if you're mid-term), clawback conditions from your original cashback, and approximately $1,000 in legal fees can dramatically reduce that lump sum. Some borrowers may even face broker clawback fees.
'That $9,000 to start off with could easily dwindle down,' Aaron warns. He suggests instead asking your current bank for a smaller retention payment (around $3,000) - less cash but far simpler admin.
The 30-year trap
Refinancing often resets your loan term to 30 years, which can be costly if you've already paid down several years. Aaron gives an example: after 9 years of a mortgage with 21 years remaining, refinancing back to 30 years means you'll pay interest for 39 years total - nearly a third more in lifetime interest.
The fix? Aaron advises ensuring any refinance maintains your original repayment levels to keep your timeline on track. 'Hopefully... the broker or bank says something like, let's increase your repayments back to what they were.'
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
Keep learning
How offset accounts actually work
An offset account links your everyday savings to your mortgage. You only pay interest on the difference.
Paying extra on your mortgage: does it actually work?
Yes, it works. Extra repayments go straight onto the loan balance, and interest is charged on the balance, so every extra dollar stops earning the bank interest for the rest of the loan.
The "special" rate: what 20% deposit actually buys you
The rates NZ banks advertise are usually "special" rates — and the headline condition is at least 20% deposit or equity.
Weekly vs Monthly Repayments: What Actually Saves You Money
Paying weekly instead of monthly doesn't automatically save you money or time on your mortgage
How Extra Repayments Can Save You Years on Your Mortgage
Paying an extra $970/month on a $500k loan at 5% saves 13 years.
How Small Extra Repayments Save Big on Your Mortgage
An extra $5/day ($35/week) on a $650k loan at 7% saves $112,000 interest over 30 years.
Why New Zealand Mortgage Rates Are Increasing
All major NZ banks have now increased their longer-term fixed mortgage rates.
How Your Daily Coffee Could Save You $107,000 on Your Mortgage
Putting just $5 a day extra on a $500k mortgage at 7% saves $107,000 in interest.
Aaron's 2026 Interest Rate Predictions for NZ Homeowners
Aaron predicts mortgage rates will likely stay flat through 2026 despite recent bank increases.
How Rate Lock Agreements Protect You From Rising Interest Rates
Rate lock agreements let you lock in a chosen interest rate before it's applied to your mortgage.
Why Rising Interest Rates Can Help House Prices Stay Stable
Rising interest rates help keep house prices stable.
The hidden interest-only mortgage trap
Interest-only loans have much higher repayments after the interest-only period ends, as you still repay the full loan over the remaining term.
Offset Accounts vs Revolving Credit: The Key Difference
Offset accounts let you link multiple savings accounts to offset mortgage interest, while revolving credit is one lump sum.
Why the OCR drop hasn't lowered mortgage rates yet
The OCR drop hasn't yet translated to lower fixed mortgage rates.
Your weekly mortgage repayments at current rates
At a 4.49% one-year fixed rate, a $600,000 mortgage costs a specific weekly amount you can plan for.
The surprising impact of an OCR cut on your mortgage
The OCR has been cut, but some economists believe this was the wrong move.
Offset accounts in the real world: the $50,000 example
A $50,000 offset account on a typical NZ mortgage saves around $67 per week in interest.
When Fixed Loan Break Fees Cost Thousands
Fixed term break fees can cost tens of thousands if rates drop significantly.
Latest Fixed Rate Drops: What This Means for Your Mortgage
Six-month fixed rates have dropped to 5.49%.
3 Ways to Pay Off Your Investment Property Mortgage
Principal and interest repayments use both your income and rental income to steadily pay down the mortgage.
How Your Loan Term Affects the Interest You Pay
A 10-year loan term could save you over $500,000 in interest compared to a 30-year term.
3 Reasons Some People Get Cheaper Interest Rates
Borrowers with 20%+ deposits get lower rates than those with smaller deposits.
How a $50,000 Offset Account Saves Interest on Your Mortgage
A $50,000 offset account saves $242,000 in interest over 30 years on a $700,000 mortgage at 5%.
Latest Interest Rate Drops: What It Means for Your Mortgage
The mortgage rate war is heating up as banks compete by lowering their interest rates.
What a $10 Million Mortgage Costs
A $10.05 million purchase needs a $2.1 million deposit (20%).
Refix or Refinance: What’s the Difference?
Refixing means staying with your current bank and locking in a new interest rate when your term ends.
How Lower Test Rates Affect Your Mortgage Borrowing Power
NZ banks have lowered their test rates to around 8%, increasing borrowing power.
Fixed vs. Floating Rates: The Key Differences
Fixed rates are usually cheaper than floating rates and lock in your rate for a set term (e.g. two years at 5%).
Refix vs Refinance: How Much Can You Save on Your Mortgage?
Refixing a $750,000 mortgage from 7% to 4.99% saves over $200 per week.
Should you pay off your mortgage faster? The trade-offs
Faster mortgage payoff saves you interest and gives psychological benefits like feeling in control of your debt.