Refix, Restructure, or Refinance? What’s Your Next Mortgage Move?

If your fixed-term mortgage is coming up for renewal soon (or you are just reviewing your options!), you are likely looking at a few different options. You might be wondering whether you should refix, restructure, or refinance with a new bank entirely.

It is very common for people to find these options confusing and treat them as if they mean the exact same thing. In reality, they are completely different mortgage options. Choosing the right one will depend on your induvial goals and financial situation.

With interest rates shifting, it is a great time to look into these options rather than just letting your mortgage roll over automatically.

Let's break down exactly what each choice means, along with the pros and cons:

1. Refixing

What it is: When your current fixed interest rate expires, you stay with your current bank and lock in a new fixed interest rate for a new term.

👍 The Pros:

• Simple Process: It is usually very easy to do directly through your online banking app, requiring no major paperwork, credit checks, or lawyers.

• Certainty: You know exactly what your repayments will look like for the length of the fixed term, making household budgeting straightforward.

👎 The Cons:

• No Flexibility: If you fix your whole loan and want to make a large lump-sum repayment early, you will likely face bank break fees.

• Locked In: You are limited to what your current bank is offering, even if a competitor has dropped their rates.

2. Restructuring

What it is: You stay with your current bank, but you change how your mortgage structure is organised. This might mean splitting a large loan into smaller portions to manage interest rate risks, or doing the exact opposite of consolidating multiple different mortgage portions that have rolled off their fixed terms back into one single.

👍 The Pros:

• Flexibility: It allows you to tailor your mortgage structure, potentially giving you the ability to pay down debt faster using features your bank offers.

• Manages Interest Rate Risk: You can stagger your fixed-term expiry dates so your entire mortgage does not come up for renewal at the exact same time.

• Adapts to Life Changes: Ideal if your income or lifestyle has changed and your current mortgage setup no longer aligns with your day-to-day needs.

👎 The Cons:

• Requires Active Management: Utilising a more customised structure with different loan types or features (such as a revolving credit account) means you may need to keep a closer eye on your accounts.

• Potential Fees: If you make these structural changes before your current fixed term ends, your bank may charge you a fee to do so.

3. Refinancing

What it is: Moving your entire home loan from your current bank to a completely new lender. The new bank pays off your old mortgage, and you start fresh with a new loan agreement under their terms and criteria.

👍 The Pros:

• Cash Incentives: Banks compete heavily for customers and often offer cash contributions to help you switch over.

• Better Rates or Features: You can shop around to secure a lower interest rate or gain access to unique loan options your old bank does not provide.

👎 The Cons:

• Cashback Repayment Periods: If you received a cash back from your current bank when you signed up and you leave too early, you will usually have to pay that money back.

• Application Process: You have to go through a full loan application again, which means proving your income, undergoing credit checks, and paying legal fees to switch the mortgage over.

Which option is right for you?

Choosing between these options depends entirely on your specific circumstances. There is never a one-size-fits-all solution when it comes to mortgages.

Refixing might be the right path if your current layout works well and you simply want a straightforward process to lock in a new term.

Restructuring might suit you better if you want to alter the mix of your current loan components to better match your cash flow and financial goals.

Refinancing could be the best move if another lender has policies, criteria, or features that fit your overall plans much better.

Because every household budget and long-term plan is different, I look closely at your entire financial situation to figure out how to structure your loan to your advantage. A small adjustment to the way your mortgage is structured can potentially save you thousands over the life of your loan.

If you would like me to review your specific situation and help you build the right strategy, feel free to get in touch. Book a quick, no-obligation chat here and we can look at the best strategy for your goals.