Refinancing for Property Investors: What You Need to Know
If you’ve owned investment properties for a few years, you might think your mortgage setup is already sorted. But markets, banks, and your own financial position change—and so should your lending. Refinancing is a valuable tool for property investors, not just to chase better interest rates, but to reset interest-only periods, access equity, diversify lenders, and optimise your portfolio for growth.
Why Refinancing Isn’t Just About Rates
When most people think of refinancing, they assume the main benefit is a better interest rate. While that’s true to some extent, for investors it’s often about much more strategic goals.
Resetting interest-only periods is one of the most common reasons investors refinance. Most banks allow a maximum of five years on interest-only loans. Once that ends, many borrowers are shifted to principal and interest repayments—reducing cash flow and your ability to borrow further. Refinancing can “reset the clock” on those five years, which can be helpful for improving serviceability if you’re planning to expand your portfolio.
Keep Control by Using More Than One Lender
Many Kiwi investors are surprised to discover that their lender can claim 100% of the proceeds from a property sale—even if the mortgage on that specific property is much lower. Why? Because your entire lending is typically cross-collateralised when you bank with just one lender. From the bank’s point of view, the security is pooled across your whole portfolio.
If you want to sell a property and keep some of the cash—for example, to fund a new purchase or a renovation—you could find your lender holding all the cards.
Refinancing allows you to diversify across lenders, separating securities and giving you more control over each property. It also means that if one bank forces you onto principal and interest repayments, that pressure doesn’t affect your entire portfolio.
Unlocking Equity Without a Sale
Refinancing can also release usable equity, giving you access to capital without needing to sell a property. Whether you’re funding a renovation, buying your next investment, or restructuring ownership (such as transferring into a trust), accessing equity can be a powerful enabler for long-term strategy.
Some banks may allow higher loan-to-value ratios on certain types of properties, or be more comfortable lending against smaller apartments, new builds, or terraced houses. Every bank has slightly different rules, which is why working with a mortgage adviser familiar with investment lending is essential.
Refinancing During a Restructure
If you’re shifting your properties into a trust or restructuring for asset protection, refinancing can be an effective way to handle the cost of the transition. Legal fees, mortgage break fees, and other costs can often be offset by cash incentives (cashbacks) offered by your new lender. This can soften the impact of a restructure, especially if your lending is also reset on interest-only terms or you secure a better rate.
Improve Serviceability (and Keep Borrowing)
Banks test your ability to repay loans under conservative assumptions—usually principal and interest repayments at test rates well over 6%. For investors with multiple properties, these stress tests can prevent you from borrowing further even if you’re comfortably covering your repayments in real life.
By refinancing and resetting loan terms, you can extend the effective repayment schedule and often improve your ability to pass the bank’s servicing calculations. For example, a loan nearing the end of its term will be assessed as having high repayments, which can limit how much more you can borrow. Refinancing extends that term again, reducing the calculated repayment burden.
Making Sure Your Portfolio Still Works
From shifting market conditions to changing lending criteria, a mortgage strategy that worked five years ago may not be the best one for you now. Refinancing offers the opportunity to tidy up your structure, isolate properties with individual lenders, reset interest-only terms, and ensure your setup supports your investment goals.
Some investors refinance to separate lending on properties they plan to sell in the next year, ensuring proceeds from a sale aren’t absorbed by the bank. Others refinance from a non-bank lender into a mainstream bank once their servicing position has improved, saving thousands per year in interest.
Is Refinancing Worth It?
Every investor’s situation is different, but if you haven’t reviewed your structure in a few years, it’s worth a check-in. Ask yourself:
Are my interest-only terms about to expire?
Is my equity stuck with one lender?
Do I have a plan for accessing capital if an opportunity arises?
Would splitting lenders give me more control?
Is my borrowing capacity limited by old loan structures?
A good mortgage adviser will be able to model different refinancing scenarios and help you decide whether it’s time to act.
Final Thought: Strategy Over Rates
Refinancing for property investors isn’t about chasing the lowest rate—it’s about creating the flexibility, control, and capacity to grow your portfolio while managing risk. Done well, it can be one of the most important tools in your investment toolkit.
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