Refinancing your mortgage can save tens of thousands — but break fees and switching costs can erode early savings. This calculator shows exactly how long it takes to break even and how much you’ll save over your remaining term.
On a $600,000 mortgage, dropping from 6.00% to 5.50% saves $3,180/year. If the break fee and switching costs total $6,000, you break even in under 2 years. Over a 25-year remaining term, you save approximately $48,000 in interest — well worth switching.
Refinancing Savings Calculator
Refinancing Break-Even Calculator
What Are Break Fees?
A break fee (also called an early repayment charge or ERC) applies when you exit a fixed rate mortgage before the fixed term ends. The amount depends on:
- How much you owe
- How much time remains on your fixed term
- The difference between your contracted rate and the current market rate for that term (the “wholesale break cost”)
Break fees can be $0 (if current rates are higher than your contracted rate) or tens of thousands (if rates have fallen significantly since you fixed).
Important: If current wholesale rates are above your fixed rate, your break fee may be zero or very small. Ask your bank for an exact break fee calculation before making any decision.
See the full mortgage break fees guide for how NZ banks calculate break fees.
Switching Costs Beyond the Break Fee
| Cost | Typical amount |
|---|---|
| Break fee (fixed rate exit) | $0–$15,000+ |
| Legal fees (new mortgage) | $800–$1,500 |
| Registered valuation (if required) | $600–$900 |
| New lender application fee | $0–$500 |
| Discharge fee (existing lender) | $0–$300 |
| Less: cashback from new lender | −$1,000 to −$3,000 |
Many banks offer cashback of $1,000–$3,000 when you refinance to them, which can substantially offset switching costs. See cashback mortgages NZ.
When Refinancing Makes Sense
| Scenario | Likely verdict |
|---|---|
| Rate falls 0.50%+ with no break fee (at rollover) | Almost always worth it |
| Rate falls 0.25%+ with small break fee, 5+ years remaining | Usually worth it |
| You want to restructure (extend term, change split) | Case by case |
| Rate falls but large break fee eats all savings | Often not worth it |
| Current rate is below market (refixing early) | Rarely worth it |
At rollover (end of fixed term): There is no break fee at rollover — this is the ideal time to shop around. Compare all banks 4–6 weeks before your term ends. Most lenders will match or beat competitor rates to retain your business.
How to Negotiate a Better Rate
Before refinancing, try negotiating with your current bank:
- Get quotes from 2–3 competing banks
- Tell your current bank you’re considering switching
- Ask to speak to a retention specialist (not the standard call centre)
- Request a rate match or improvement
- If declined, proceed with switching
Most NZ banks will move 0.10%–0.30% to retain a borrower with a clean payment history, saving you the hassle of switching entirely.
Frequently Asked Questions
Is it worth refinancing my NZ mortgage to save 0.5%?
Yes, in most cases. On a $600,000 balance with a remaining term of 20+ years, 0.5% saves around $3,000/year. Even with $5,000 in switching costs, you break even in under 2 years and save tens of thousands over the full term.
When is the best time to refinance in NZ?
At rollover (when your fixed term expires) — there’s no break fee and you have full flexibility. If you’re mid-term, the savings need to outweigh the break fee. If rates have risen since you fixed, break fees are usually zero or minimal.
Does refinancing hurt your credit score in NZ?
Applying for a new mortgage creates a credit inquiry, which can slightly affect your credit score. However, credit score impacts from a single mortgage application are generally minor and short-lived. Multiple applications in a short period have a bigger effect — use a broker to make a single application across multiple lenders.
How long does refinancing take in NZ?
Typically 2–6 weeks from application to settlement. At rollover, your existing lender can refix instantly. Switching to a new lender involves a fresh application, valuation (sometimes), and legal transfer — usually 3–4 weeks.
Can I refinance to get a lower deposit requirement?
No — LVR restrictions apply to the total loan-to-value ratio, not just new applications. If your property has appreciated since purchase, your LVR will have naturally improved.