Do Payments Go Down When You Remortgage? NZ Guide with Real Examples
Will remortgaging lower your repayments? Learn when payments fall or rise in NZ, the math, fees, and steps. Clear examples, checklists, and risks to avoid.
Remortgage Payments: A Practical Guide
Did you know most homeowners overpay on their remortgage payments by around 10 % simply because they don’t understand the numbers? If you’re thinking about switching your mortgage, knowing how the new payment is built can save you cash and stress.
First off, a remortgage payment is the monthly amount you owe after you replace your existing mortgage with a new deal. The figure depends on three things: the loan amount you carry over, the interest rate you lock in, and the term you choose. Pull out the numbers from your current statement, plug them into a simple calculator, and you’ll see the exact impact.
How Remortgage Payments Work
When you remortgage, the lender reassesses the balance you still owe. If you borrow a lower amount or secure a better rate, your payment drops. But extending the term can also lower the monthly figure while increasing total interest paid over time. It’s a trade‑off: lower monthly cash flow versus higher long‑term cost.
Interest rates are usually quoted as annual percentages (APR). To get the monthly rate, divide the APR by 12. Then multiply that rate by your loan balance, add any fees you’ve rolled into the loan, and you have a rough monthly payment. Most lenders will provide an exact schedule, but this quick math helps you compare offers before you even log in.
Tips to Lower Your Remortgage Payments
1. **Shop around** – Even a 0.25 % drop in rate can shave £30‑£50 off a £1,200 payment. Use comparison sites, talk to local brokers, and ask friends about their experiences.
2. **Consider a shorter term** – It sounds counter‑intuitive, but a 20‑year term versus 25 years can cut interest dramatically, sometimes offsetting the higher monthly amount with long‑term savings.
3. **Pay a larger deposit** – If you can afford a bigger lump sum when you remortgage, the loan amount shrinks and the interest you pay drops. Even a 5 % boost can make a noticeable difference.
4. **Watch for fees** – Arrangement, valuation, and early‑repayment fees can add up. Ask the lender for a full breakdown and see if you can negotiate them away or spread them over the loan.
5. **Lock in a fixed rate** – If rates are rising, a fixed deal protects you from future hikes. Just ensure the fixed period matches your plans; otherwise you could face a penalty when you switch again.
6. **Use an offset account** – Some lenders let you link a current account to your mortgage. The money you keep in that account reduces the balance on which interest is charged, lowering the payment without extra effort.
7. **Re‑evaluate your budget** – Before you lock in, run a simple cash‑flow check. List income, regular outgoings and the new payment. If you’re tight, consider a temporary payment holiday or a reduced payment option, but remember these usually add interest later.
Remortgaging isn’t just about chasing the lowest rate; it’s about finding a payment structure that fits your life now and later. Use the quick calculation method, compare a few offers, and weigh the total cost, not just the headline rate. With the right approach, you can keep more of your money flowing into savings or everyday spending, instead of unnecessary interest.
