Can I refinance a business loan in New Zealand?

Common reasons to refinance

• Lower the rate. If market rates have fallen since you took the original loan, refinancing can lock in savings.
• Lengthen the term. Reduce monthly cash-flow pressure by spreading the loan over a longer period (at the cost of more total interest).
• Consolidate facilities. Roll multiple loans + credit cards into a single loan with one repayment.
• Switch lender. Move from a relationship that isn't working — bank service, alternative-lender pricing, or a tighter facility than you need.
• Unlock equity. If your property has appreciated, refinancing at a higher LVR can release cash for the business.

Costs to budget for

• Break costs on the old loan if it's fixed-rate (variable-rate loans usually have no break cost).
• Discharge fees charged by the old lender to release security.
• Establishment fees on the new loan (often 0.5–1.5% of loan amount, sometimes capped).
• Legal fees for new security registrations and discharge of old security.
• Valuation fees if a fresh property valuation is required.

Refinance break-even calculation

A simple framework before committing:

1. Total switching cost (break cost + discharge + establishment + legal + valuation).
2. Annual rate savings on the new loan (rate gap × loan balance).
3. Break-even period = total switching cost ÷ annual savings.
4. Compare against your realistic remaining hold period for the loan. If you'll repay in less time than break-even, the refinance loses money.

Variables to also consider: fee differences (monthly fees, line fees), facility flexibility (extra repayments allowed?), and any non-financial factors (lender service, banking package).

Watch-outs

• Consolidating short-term into long-term debt reduces monthly repayment but increases total interest paid over the life of the loan.
• Cash-out refinance increases your overall debt — make sure the new use of funds justifies the increase.
• Multiple credit enquiries from shopping the market hard can damage your file. Use pre-qualification or a single referral channel.
• Existing relationship benefits (banking package, FX rates, transactional fees) may not transfer — factor in the all-in cost of moving.