I’ll be straight with you – the banks love it when you refix online. It’s quick, it’s efficient for them, and frankly, it saves them money.
But the vast majority of people who come to see me want to have a proper conversation before they make their refix decision, not after they’ve already locked themselves in.
Last week alone, I had three separate conversations about refixing. All ending in “I’m not sure what to do.” Then comes the flood of questions: “Should I fix long or short? What are the banks doing with their rates? What’s happening with the OCR? One mate told me to fix for twelve months, another reckons I should go longer. My neighbour’s doing something completely different – is that right for me too?”
These aren’t silly questions. They’re exactly the right questions to be asking. But what worries me is that too many people are making these decisions in isolation, often just clicking whatever option their current bank suggests, without considering whether it suits their situation.
The click-and-hope approach
I had a client come to me recently who’d been doing exactly this for the past decade. Every time his rate came up for renewal, he’d just hop onto his banking app, click whatever rate looked reasonable, and call it done. Ten years of this approach, and whilst it hadn’t been a disaster, it certainly hadn’t been optimal either.
The problem became obvious when his 3.4% rate was due to roll off onto something around 5%. Now, that’s still a pretty reasonable rate historically, but when you’re talking about a $750,000 mortgage, that jump from 3.4% to 5% represents a significant increase in his monthly payments. If he’d split his mortgage years ago, he could have spread this impact out – maybe taking some of the pain last year and some next year, rather than copping it all at once.
But because he’d been doing everything himself through his app, he’d never considered splitting as an option. The bank’s online system doesn’t exactly walk you through strategic mortgage planning – it just lets you pick a rate and term. Job done, from their perspective.
What you can’t do online
Most people don’t realise that online refixing only covers the basics. You can set your rate and choose your term, and that’s about it.
- What if you want to restructure your loans?
- What if you need to adjust your split arrangements?
- Want to add some revolving credit?
- Thinking about switching from principal and interest to interest-only for a while?
None of that can be done online.
I regularly have conversations with people who are anticipating changes in their lives – maybe they’re planning renovations, considering a career change, or thinking about investment property. These situations often call for tweaking the mortgage structure, not just picking a new rate. But if you’re doing everything online, you’ll miss these opportunities entirely.
The other limitation is more fundamental: companies and trusts can’t refix online at all. If your mortgage is held in a business structure, you’re going to need to talk to someone regardless.
The real cost of going it alone
What drives this point home for me is the conversations I have with new clients whose mortgage arrangements are completely out of whack with their circumstances. Usually, it’s because they haven’t talked to anyone about their mortgage for years – they’ve just been clicking their way through each refix without any strategic thinking.
Recently, one of my existing clients came back to me with a confession that perfectly illustrates this. During the period when rates were shooting through the roof, he’d decided to handle his refix himself rather than wait for our appointment. His exact words were: “The last time we did a refix, we just did it ourselves. And we got it wrong. I wish we’d listened to you.”
We’ve got the answer for these conversations
I’m seeing more and more people wanting to have these conversations before they make their refix decisions, so we’re building more capacity into this part of our business to do just that.
Kirsty, who’s been working with me for the past three years and obtained her advisor qualifications during that time, is moving from handling refix administration to providing refix advice.
She’s been having these conversations with customers alongside me for years, so she knows exactly what questions to ask and what factors to consider. For the really complicated lending situations, I’m still very much in the background, but for most refix decisions, she’s perfectly placed to help people think through their options properly. Contact Kirsty to find out more.
The bottom line
I’m not saying you can’t refix online – plenty of people know exactly what they want to do and are confident in their decision. For them, the DIY approach works fine.
But if you’ve got questions, if you’re wondering about your options, or if your circumstances have changed since your last refix, then it’s worth having a conversation before you just click and hope for the best.