Are you trapped in a high fixed-rate mortgage while watching interest rates tumble? The financial sting of being locked into rates around 7% until 2028 or 2029 has many Kiwi homeowners questioning if they should break their fixed terms and refix at today's lower rates.
This question doesn't have a simple answer. Breaking a fixed mortgage involves substantial upfront costs—we discuss one client facing an $8,000 break fee—but the long-term savings from dropping to a rate that's 2% lower might outweigh this initial pain. The calculation involves much more than comparing two numbers on a page.
When considering a break, you'll need to evaluate immediate cash flow benefits (potentially reducing fortnightly payments from $800 to $600), long-term mortgage reduction (possibly shaving years off your loan term), available cash to cover break fees, potential cash incentives from new lenders if refinancing, and the crystal ball question nobody can answer: where are interest rates heading? With next year's election looming, economic factors become even more unpredictable.
This is definitely not a DIY financial decision. Even as financial advisors, we consult mortgage specialists when making these decisions about our own mortgages. Each situation is unique, requiring personalized analysis of your specific numbers and circumstances. Whether you reach out to us or another mortgage professional, make sure you're getting expert guidance before making a decision that could impact your financial position for years to come.

Send us a text

Support the show

Buy your first home in NZ Weekly Webinars

You thought it's not possible or the dream is too far away? Come to my webinar and I will show you, you are much closer to your dream, than you think you are!

Join Here - https://bit.ly/4m9SL72