Free Mortgage Refinance Calculator for New Zealanders
Compare your current home loan to a refinance offer. The calculator returns the change in repayments, the break-even period for switching costs, and the total saving over the remaining term.
Current vs new loan
Based on a $580,000 balance over 25 years, switching from 7.20% to 6.20%.
About our Mortgage Refinance Calculator
The break-even on a typical NZ refinanceRefinanceSwitching a mortgage to a new bank or new product; may incur break and switching fees.View in glossary → sits at 6-12 months. A 1-percentage-point drop on a $500,000 loan saves about $400 a month, and the $3,000-$4,000 of switching costs (legal, valuation, discharge fee) recover from those savings inside a year.
The calculator runs the comparison with the new rate against the same remaining term as the old loan. It returns the monthly saving, the months to recover switching costs, and the projected lifetime saving if you hold the new loan to the end of the original term.
Cash-back offers from the new bank shorten the break-even further. Most NZ banks pay $2,000-$5,000 in cash on a refinance, with a clawback if you leave inside 3-4 years. Treat the cash-back as a discount on switching costs, not a windfall, since the clawback claws it back if you keep moving banks.
Move the rate sliders to see how a smaller rate gap changes the break-even. A 0.25% rate gap on a $500,000 loan only saves around $100 a month, which means switching costs of $3,500 take 35 months to recover. A 1% gap, by contrast, recovers in under a year.
How to use it
Enter your current loan balance, years remaining, current contract rate, the new rate on offer, and an estimate of switching costs.
For switching costs, $3,000-$4,000 is the typical range for a straightforward refinance with one solicitor and a new-bank valuation. Add a break fee if your existing loan is fixed with time remaining. Subtract any cash-back the new bank is offering (after netting off the clawback risk if you might switch again).
The result panel returns the monthly saving, the months to break even on switching costs, and the lifetime interest saving if you stay on the new loan for the full remaining term.
Why use it
Banks rarely volunteer that you could switch and save. The conversation starts with a written offer from a competitor, which is most easily negotiated once you have run the numbers and know the saving covers the switching costs comfortably.
The break-even period is the key figure. Below 12 months, a refinance is a clear-cut win for any borrower planning to stay in the home for at least a couple of years. Above 24 months, the saving depends heavily on whether the new rate sticks for the full payback window, which it usually does not on a 1-year fixed loan.
For borrowers who refix every year or two anyway, the calculator also shows whether a competitor offer this year is meaningfully better than the existing bank’s match, or whether internal refixing at the same rate would land in the same place without the switching costs.
The maths behind it
Net saving = (Old monthly − New monthly) × months − Switching costs New monthly is the standard amortising-loan repayment at the new rate over the remaining term. The monthly saving is the difference between the two repayments. Multiply by the number of months you intend to hold the loan, then subtract switching costs (legal fees, valuation, discharge fee, plus any break fee on the existing loan). The break-even point is switching costs ÷ monthly saving, expressed in months.
Worked example
Carla, GP nurse in Nelson, weighing a refinance from 7.50% to 5.85%.
Carla owes $480,000 with 25 years left on her mortgage. She is paying 7.50% with her current bank, who has refused to match a 5.85% offer from a competitor.
At 7.50%, her monthly repayment is roughly $3,547. At 5.85% over the same 25-year term, the repayment drops to about $3,047. Switching saves her $500 a month.
Switching costs run to roughly $3,500 (legal $1,500, registered valuation $900, discharge $250, $1,000 buffer for incidentals). At a $500-a-month saving, the break-even sits at about 7 months.
If Carla stays in the new loan for the full 25-year remaining term, the saving compounds to roughly $150,000 of lifetime interest. The competitor’s $4,000 cash-back, common on NZ refinance deals, would shorten the break-even period further still, though she has to stay with the new bank for at least 3-4 years to avoid clawback.
Things to keep in mind
- Break fees on the existing loan can swallow the saving. If your current loan is on a fixed rate with time still to run, the break feeBreak feeCharge for exiting a fixed-rate mortgage early; depends on rate movement and time remaining.View in glossary → sits on top of the switching costs. The break-fee calculator estimates the size; for fixed loans with more than a year left and meaningful rate gap, the fee can wipe out the first year of savings.
- Cash-back offers carry clawback. Most NZ banks pay a cash incentive (typically $2,000-$5,000) for a refinance, on the condition you stay 3-4 years. Leaving early triggers clawback of the cash, pro-rated by months elapsed. Treat the cash-back as a discount on switching costs, not a windfall.
- Loan term affects the saving. Refinancing onto a longer term lowers the monthly repayment but lifts total interest. The calculator assumes the new term matches the remaining term on the old loan. If you stretch the new loan to 30 years, the monthly saving looks bigger but the lifetime saving falls.
- The bank’s "match" is sometimes an option. Some borrowers find their existing bank will match a competitor offer once they bring the written quote in, particularly if the borrower’s history is strong. Refinancing internally avoids most switching costs and the discharge fee.
- <span class="term" tabindex="0" aria-describedby="term-tip-lvr">LVR<span class="term__tip" role="tooltip" id="term-tip-lvr"><strong>LVR</strong><span class="term__tip-def">Loan-to-Value Ratio; loan as a percentage of property value. RBNZ caps it at 80% for owner-occupiers.</span><a href="/glossary/#lvr" class="term__tip-link">View in glossary →</a></span></span> affects the new offer. New banks assess LVR against the bank’s own valuation, not the original purchase price. If your property has dropped in value or you are above 80% LVR after the new bank’s valuation, the rate offered may be higher than the headline figure.
NZ-specific notes
FAQs
How quickly does a refinance pay back?
For a typical NZ refinance with $3,000-$4,000 of switching costs and a saving of around $400-$500 per month, the break-even sits at 6-12 months. Cash-back offers shorten the break-even further. Refinances with no rate saving (e.g. switching for a cash-back alone) rarely pay back within the bank’s clawback window.
What counts as a switching cost?
Solicitor or conveyancing fees ($1,000-$2,000), the new bank’s valuation if it commissions one ($700-$1,200), a discharge fee from the existing bank (often $200-$300), and any establishment or application fee on the new loan. Rolling these costs into the new loan is possible but adds interest to the total.
Should the break fee on the old loan be added in?
Yes, if your current loan is on a fixed rate with time still to run and wholesale rates have dropped since you fixed. The break-fee calculator estimates the cost; some refinance offers include a contribution to your break fee, which sits in the cash-back column.
How does the calculator handle different new-loan terms?
It uses the years-remaining figure for both old and new repayments. For a longer new term (extending the loan), enter the longer figure as years-remaining; the monthly saving grows but the lifetime saving falls.
Can I refinance and keep the same bank?
Yes, this is usually a simple refix at the end of the current fixed term, with no switching costs. Some banks will refix mid-term at competitive rates if you bring a written quote from a competitor, though the bank applies its break-fee maths internally.
Is the cash-back taxable?
For an owner-occupier loan, no, it is treated as a discount on the loan rather than income. For a rental property loan, the IRD treatment is more nuanced; a chartered accountant should be consulted before claiming it.
How long does the refinance process take?
Most NZ refinances complete in 4-6 weeks: 2 weeks for the new bank’s approval, 1 week for valuation, 2 weeks for legal and discharge documentation, then settlement. Existing-bank refinances are typically faster.
References & sources
- Reserve Bank of New Zealand, "Residential mortgage lending by loan-to-valuation ratio and purpose use (C30)". rbnz.govt.nz
- Commerce Commission, "Personal banking services market study" (2024). comcom.govt.nz
- Reserve Bank of New Zealand, "LVR restrictions". rbnz.govt.nz
- Inland Revenue, "Interest deductions on residential investment property". ird.govt.nz