Refix, Refinance or Restructure

These terms are all common place when your dealing with home finance. You should understand what each one is when it comes to making decisions about what is likely to be your biggest asset.

What is a Mortgage Refix

Refixing is when you lock in a new interest rate for a set period of time once your current fixed interest rate period has expired. An example is some who had agreed on a fixed rate for 2 years with their bank. After 2 years is up they decide to fix again for 2 more years at a new rate. That's a refix.

If you want to explore the effect a change in rates will have on what you pay each month, try different rates in our Calculators page.

What is a Mortgage Restructure?

A mortgage restructure is changing the way your mortgage is structured or in simpler language the way it works, there are many options than just just picking a fixed time period to pay off your loan and fixing a rate. An example is someone who is coming to the end of their fixed 2 year period commitment and wants to explore other ways to more effectively pay off their home loan. Some examples of what you might consider as options for a restructure.

Splitting your mortgage into a fixed and floating component

Why: You have surety concerning the fixed payments i.e. exactly how much you will pay over a set period of time. With the floating portion you have the flexibility to make lump sum payments without getting penalised. This gives you great flexibility if you happen to come into some money via a bonus or gift and want to reduce your mortgage duration.

Setting up an Offset Mortgage

Why: An offset mortgage allows you to designate a set number of accounts that hold a positive balance to be used to offset the amount of interest you pay on your mortgage. For example if you have a mortgage of $250,000 but you have $15,000 in the accounts you've designated as offset accounts you will only pay mortgage interest on $235,000 instead of $250,000. You can learn more about Offset Mortgages in our article here.

Setting up a Revolving Credit Mortgage

Why: A revolving credit mortgage is like a big overdraft account with all income and payments being managed from one account. It provides huge flexibility when managing your funds but also requires good discipline as you can redraw up to your limit. You really need to understand this product before committing to it, if you'd like to understand more about how they work you can read our article here.

What is a Mortgage Refinance?

A mortgage refinance is when you move your home loan from one bank to another i.e. you may feel you are not getting the service you require or another bank may have a mortgage product like an offset account that you want to setup. What actually happens in this instance is that you pay off your home loan in full and move to a new bank.

You should be aware that when you take out a home loan with a bank, you are their customer. Over the course of your 25 or 30 year term most people end up paying the value of what they borrowed twice i.e. if you take out a $250,000 mortgage, over 30 years you end up paying roughly $500,000. The point being, you are a really great customer and the bank should look after you. If they don't you should look around to assess options.