Negotiate your rate, but don’t forget about your structure

Ever since Covid-19, lenders have bombarded us all with ever decreasing interest rate specials.

Low interest rates are great but one of the trade-offs is increasing property values which generally leads to increasing debt. Reviewing your mortgage regularly is vital to ensuring you get your debt under control, while also considering your lifestyle needs.

Most mortgage debt in NZ is on fixed rates mainly because floating mortgages are so much more expensive than fixed rate mortgages. We find that a great trigger to review your mortgage structure is when a fixed rate expires.

Here’s what we look for:

What’s changed? So much can happen in just 1 year! Often, we find that people’s incomes have changed, they have new additions to their families, they’ve accumulated some short-term debt, saved some money, or they’re looking to replace a vehicle or purchase a new car or boat.

Restructuring a mortgage by changing payment amounts, borrowing to consolidate existing loans, or making lump sum reductions to existing mortgages can really help clients to get what they want out of life. 

In recent years, more and more lenders are choosing to offer clients fixed rate options online by using their internet banking portals. It’s a simple process for the client – you simply need to ‘click here’ and it’s all done and dusted. Simple and easy is one thing, but here at Apex we still think a little bit of advice can be very helpful.

Cheap rates

It’s easy to look at the rates on offer and pick the ‘cheapest’ rate. The cheapest rate on offer at the moment is the 1-year fixed rate and it’s extremely low – currently around 2.29%. While we recommend taking advantage of this particular rate, it’s important to note that all rates are currently at historically low levels (5 years fixed is still significantly below 3%) so it might be a good idea to secure some of your lending on longer term fixed rates. This is important if interest rate increases would have a significant impact on your household budget.

Another aspect we look at when a client is moving to a lower interest rate is whether they are able to continue to make the same repayments they used to. This is a great way of repaying your debt faster without having to change your lifestyle.

We are more than happy to have a chat with our clients about their mortgage structure to make sure it’s structured in a way that works for you. Feel free to contact us here, or on 0800 809 009 if you’d like to have a chat.


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