How does a cash-out refinance work in New Zealand?

A cash-out refinance replaces your existing mortgage with a larger loan. The difference between your new loan amount and your old outstanding balance is paid to you as cash. For example, if you owe $400,000 on a home worth $700,000 and refinance to $500,000, you receive $100,000 cash (minus any fees). Your monthly repayments will be higher because you are now borrowing more, and your lender will need your loan-to-value ratio (LVR) to meet their lending criteria, typically no higher than 80% LVR for a cash-out refinance.

What is the maximum LVR for a cash-out refinance in NZ?

Most New Zealand banks limit cash-out refinancing to a maximum loan-to-value ratio (LVR) of 80% of the property's current market value. Some lenders may go to 85% with a low-equity premium or specialist lending conditions. The Reserve Bank of NZ imposes LVR restrictions on banks, and as at 2026 owner-occupiers must generally have at least 20% equity remaining after any cash out. The exact maximum depends on your lender, your income, and your credit profile.

What costs should I allow for in a cash-out refinance?

Common costs include: a mortgage discharge fee from your current lender (typically $150 to $300), a break fee if you are leaving a fixed-rate mortgage early (can be several thousand dollars), a new mortgage registration fee (approximately $200), legal fees for both discharge and new registration (typically $1,000 to $2,500 in total), and a lender's valuation fee if required ($500 to $900). Some lenders offer cash contributions to offset switching costs. Always get a written cost breakdown before proceeding.

Cash-Out Refinance Calculator

Work out how much cash you can release from your home's equity by refinancing to a larger mortgage, and see your new monthly repayment alongside the total additional interest cost.

Enter your current mortgage details and the cash amount you need. The calculator checks your new loan-to-value ratio (LVR), shows your new repayment, and compares total interest paid under both scenarios.

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Updated June 2026 Standard amortisation formula. LVR limits reflect RBNZ owner-occupier settings as at 2026.

1. Your Current Mortgage

Current home value

Current mortgage balance owing

Remaining term on current mortgage (years)

years

Current interest rate (% p.a.)

% p.a.

2. Your Refinance Plan

Cash-out amount you want

New loan term (years)

New interest rate (% p.a.)

% p.a.

Refinancing costs (discharge, legal, etc.) (optional)

Your Cash-Out Refinance Results

New Loan Amount

Balance + cash out

New Monthly Repayment
-
Principal and interest

Net Cash Received

After refinancing costs

New LVR

Loan-to-value ratio

LVR after cash-out refinance

80% LVR limit shown as guideline for most NZ banks

Current Mortgage

Outstanding balance-

Interest rate-

Remaining term-

Current monthly repayment-

Total interest remaining-

After Cash-Out Refinance

New loan amount-

New interest rate-

New loan term-

New monthly repayment-

Change in monthly payment-

Total interest on new loan-

Equity Summary

Home value-

New loan amount-

Remaining equity-

New LVR-

LVR status-

Cost of Accessing Cash

Cash-out amount-

Refinancing costs-

Net cash received-

Extra interest vs current path-

Total cost of cash access-

Summary: Enter your details above to see your results.

How a Cash-Out Refinance Works

A cash-out refinance is when you replace your existing home loan with a new, larger mortgage and receive the difference between the two loan amounts as a lump sum of cash. You are essentially unlocking equity that has built up in your home, whether through paying down your mortgage, rising property values, or both.

For example: your home is worth $750,000 and you owe $450,000. You have $300,000 in equity. If your bank allows you to borrow to 80% LVR (80% of $750,000 = $600,000), you could potentially access up to $150,000 in cash by refinancing to a $600,000 loan. After paying refinancing costs, you receive the net cash to use as you wish.

The Formula Used in This Calculator

Monthly repayments are calculated using the standard mortgage amortisation formula:

Monthly payment = P × r × (1 + r)^n ÷ ((1 + r)^n - 1)

Where P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (term in years multiplied by 12). Total interest is the sum of all payments minus the principal. This is applied separately to your current remaining loan and your proposed new loan.

LVR Limits in New Zealand

The Reserve Bank of New Zealand (RBNZ) sets loan-to-value ratio (LVR) restrictions that banks must follow. As at 2026, most owner-occupier borrowers must retain at least 20% equity, meaning the maximum LVR for a cash-out refinance is typically 80%. Some lenders may offer up to 85% with a low-equity premium (LEP), but this adds cost. Investment properties face tighter LVR limits (generally 65-70% maximum).

Worked Example

Using the default values in this calculator:

Item	Current mortgage	After cash-out refinance
Loan amount	$450,000	$530,000
Interest rate	6.50% p.a.	6.20% p.a.
Term	22 years remaining	30 years
Monthly repayment	$3,208	$3,246
Total interest	$396,972	$638,591
New LVR	60.0%	70.7%

The cash-out of $80,000 (net $78,000 after $2,000 in costs) comes at a total extra interest cost of approximately $241,619 more over the life of the new loan compared to the current path, plus the refinancing costs. The monthly repayment in this example rises by $38/month due to the larger loan, even though the new rate is lower, because the term is extended to 30 years.

Common Uses for Cash-Out Refinancing

Home renovation or extension
Debt consolidation (replacing high-interest debt with lower mortgage rate)
Investment property deposit
Education costs
Emergency fund or large purchase

While a cash-out refinance can be a cost-effective way to access funds (mortgage rates are typically lower than personal loan or credit card rates), it converts unsecured debt into secured debt backed by your home. Always consider the total long-term cost, not just the monthly repayment change.

Refinancing Costs to Budget For

Discharge fee from current lender: $150 to $300
Break fee if leaving a fixed rate early: varies widely, can be several thousand dollars
Legal fees (discharge and new registration): $1,000 to $2,500
New mortgage registration: approximately $200
Valuation fee (if required by lender): $500 to $900
New lender's establishment fee: $0 to $500

Related Calculators

Mortgage Calculators: all mortgage tools in one place.
Mortgage Refinance Calculator: compare switching costs and savings on a standard refinance.
Home Equity Calculator: see how much equity you have in your property.
Mortgage Repayment Calculator: calculate repayments on any loan amount.
Loan-to-Value Calculator: check your LVR before approaching a lender.

Sources and method: Standard mortgage amortisation formula (P×r×(1+r)^n / ((1+r)^n - 1)). RBNZ LVR policy: Reserve Bank of New Zealand loan-to-value ratio restrictions (rbnz.govt.nz). Refinancing cost ranges sourced from NZ conveyancing firms and bank published fee schedules, 2026.

This calculator provides indicative estimates only. It does not account for break fees (which may be substantial if you are on a fixed rate), low-equity premiums, or individual lender criteria. Interest rates, costs, and LVR limits change over time. Speak with a mortgage adviser before refinancing.