How often should I review my investment loans?

At least annually, or whenever a fixed rate term is ending. Also review when there are significant changes to your portfolio, income, or goals.

Will refinancing affect my credit score?

Multiple loan applications in a short period can temporarily impact your credit score. However, the impact is usually minor and short-lived if you proceed with one application.

Can I refinance if my property values have dropped?

It is more difficult but not impossible. Your LVR will be higher, which may limit your options or require you to pay lenders mortgage insurance. A broker can help find lenders willing to work with your situation.

Should I refinance all my properties at once or one at a time?

This depends on your goals and circumstances. Refinancing together can simplify the process but may create cross-collateralisation. Doing it separately gives more flexibility but takes longer and may involve multiple applications.

Refinancing Investment Property Portfolio NZ

As your property portfolio grows, so does the complexity of managing your finance. Regular refinancing reviews ensure your loan structure continues to support your goals and you are not paying more than you need to.

Refinancing is not just about chasing a lower interest rate. For property investors, it can be a strategic tool for accessing equity, restructuring debt, improving cash flow, and positioning for future growth.

Reasons to Refinance Your Portfolio

Access Equity for Your Next Purchase

As property values increase and you pay down loans, equity builds in your portfolio. Refinancing can release this equity to fund deposits for additional properties. This is one of the most common reasons investors refinance.

Reduce Interest Costs

Interest rates vary between lenders and change over time. If your current rates are above market, refinancing to a lower rate can save thousands over the life of your loans. Even a 0.3% reduction on a $500,000 loan saves $1,500 per year.

Restructure Your Loans

Your loan structure that made sense when you started may not be optimal now. Refinancing lets you adjust fixed vs floating splits, separate cross-collateralised properties, or change repayment types.

Consolidate Debt

If you have loans across multiple lenders, consolidating to one lender can simplify management and may improve your negotiating position. However, consider whether this creates unwanted cross-collateralisation.

Improve Cash Flow

Extending loan terms, switching to interest-only, or securing lower rates can all improve your monthly cash flow. This can be useful if you need to improve serviceability for future borrowing.

When to Refinance

Good Times to Consider Refinancing:

☐ Fixed rate terms are coming off
☐ Property values have increased significantly
☐ Interest rates have dropped since you borrowed
☐ Your income has increased and you qualify for better terms
☐ You are preparing to purchase another property
☐ Your current structure is limiting your options

The Costs of Refinancing

Refinancing is not free, and you need to weigh the costs against the benefits. Common costs include:

Potential Refinancing Costs:

Break fees: Can be substantial if you break a fixed rate loan
Discharge fees: Your current lender may charge to release their mortgage
Legal fees: For new mortgage documentation
Valuation fees: New lender may require fresh valuations
Application fees: Some lenders charge establishment fees
Low equity margin: If your LVR is high for investment property lending, expect fewer options and possible low-equity pricing on top of standard rates

A good rule of thumb: calculate how long it will take for the savings to exceed the costs. If it takes more than two to three years to break even, the refinance may not be worthwhile unless you have other strategic reasons.

Strategic Refinancing Approaches

Laddering Fixed Rates

Instead of fixing all your loans at once, spread them across different terms. This means you always have some loans coming off fixed rates, giving you regular opportunities to refinance without break fees.

Example Laddering Strategy:

Property 1: 1-year fixed
Property 2: 2-year fixed
Property 3: 3-year fixed
Property 4: Floating (revolving credit)

Each year, one property comes off fixed rate, giving you options.

Splitting Between Lenders

Having relationships with multiple lenders gives you options and prevents over-reliance on one bank. It also naturally avoids cross-collateralisation between properties at different lenders.

Using Equity Release Strategically

When refinancing to release equity, consider setting up a separate facility or offset account. This keeps your borrowing costs lower when you do not need the funds immediately and gives you flexibility to access them quickly when opportunities arise.

The Refinancing Process

Understanding the refinancing process helps you plan and set realistic expectations:

Review your current position: Get statements, know your loan balances and terms
Define your goals: What do you want to achieve through refinancing?
Research the market: Compare rates and terms from multiple lenders
Calculate costs and savings: Factor in all fees and break costs
Apply to new lender: Prepare documents and submit application
Valuations: New lender will value your properties
Settlement: New loans pay out old loans, mortgages are transferred

The process typically takes four to six weeks, sometimes longer if valuations are needed or documentation is complex.

Working with a Mortgage Broker

For portfolio refinancing, a mortgage broker can add significant value. They have access to multiple lenders, understand complex structures, and can negotiate on your behalf. A good broker will:

Analyse your current structure and identify opportunities
Compare options across their panel of lenders
Calculate the true cost-benefit of refinancing
Manage the application process across multiple properties
Negotiate better rates and terms

Common Refinancing Mistakes

Mistakes to Avoid:

☐ Focusing only on interest rate and ignoring other terms
☐ Forgetting to factor in all costs
☐ Creating unwanted cross-collateralisation
☐ Extending terms without understanding the total interest cost
☐ Not reading the fine print on new loan contracts
☐ Timing poorly and paying unnecessary break fees

Regular Reviews Are Key

The best investors review their loan structure at least annually. Market conditions change, your portfolio evolves, and opportunities arise. By staying proactive, you can refinance at optimal times rather than being forced into it by circumstances.

Set a calendar reminder to review your loans each year. Check your rates against the market, consider your upcoming goals, and talk to your broker about whether any changes make sense.

The Bottom Line

Refinancing is a powerful tool for property investors, but it needs to be used strategically. Consider your goals, calculate the true costs and benefits, and time your moves to minimise expenses. With the right approach, regular refinancing can save you thousands and accelerate your portfolio growth.