Refinancing

27 Jun 2022
Author: Nadia Holdcroft
 

With so much talk about interest rate hikes and the possibility of recession, making too many changes with your current finance arrangements, might seem a little daunting. For some however the amazing interest rate you have had for the last few years is about to come to end of its fixed period, and you are looking at rates that are potentially double what you have become used to. While changing banks can be a pain, it might be the only way that you are able to secure a competitive rate. By shopping around and refinancing your property, you may be able to secure better rates to ensure you have security on your home going forward. Talking with your experts early and engaging an experienced broker is recommended to ensure that refinancing is the best option for you. This article sets out some things you should consider when looking to refinance.  

Discharge of Mortgage

Your existing bank will have a mortgage registered on you title and security for the debt. The loan to your existing bank will need to be repaid and the mortgage discharged as part of the refinance process. Your lawyer will arrange this on your behalf and ensure that both you and your banks interests are protected in this process. On the settlement day your bank will send us a statement with the amount required to discharge your mortgage which will include all debt owing to the bank including credit cards and overdraft facilities. We will check the lender’s repayment figure with you before repayment is made to ensure that the amount is what you were expecting.

New Lending

While we will act for you as your lawyer, we are also under obligation by the new lender to act for them as mortgagee in the transaction. The bank engages us to protect their interests in connection with the transaction. We do that by ensuring the mortgage is registered over the property title at the same time the old mortgage is discharged.

Cash Contributions

Many banks in the current market are offering cash contributions to secure your business. The intentions of the cash contribution is to assist you in the costs you will incur as part of your refinance including legal costs and in some cases break costs. It is also important to be mindful of whether you received a cash contribution from your existing bank when you took the loan with them, if you are refinancing within three years of taking your loan, many banks will ask for the cash contribution to be repaid. Engaging a mortgage broker to secure you a competitive rate and a cash contribution is often useful as they do the shopping around for you.

Insurance

As part of the lender’s requirements of advancing you the loan, they will want to ensure that the property is able to be adequately insured, with them noted as an interested party on the insurance. This insurance certificate will need to be obtained by you prior to your refinance date as we will need to provide a copy to the bank before they will advance any funds.  




How DTI Lawyers can help. The Procedure

The following outlines the standard procedure for a refinance of your mortgage, most of which we can take care of for you.

  • Receive loan instructions from the bank and review these.
  • Report to you to confirm loan documentation is received and send our Letter of Engagement to provide an estimate of costs.
  • Check with you and the lender as to preferred settlement timeframe.
  • Obtain guaranteed search of title.
  • Prepare loan documentation for signing.
  • Correspond with existing bank and arrange a discharge of the existing mortgage and receive repayment figures.
  • Set up the e-dealing in Landonline workspace and prepare client authority forms for the Mortgage and Discharge of Mortgage.
  • Check Personal Property Securities Register for any charges registered against chattels that could take priority over the bank.
  • Ensure appropriate house insurance is in place with new bank noted, obtain a copy from you.
  • Meet with you to sign the loan documentation and client authority form.
  • Arrange for deposit of balance funds to repay existing lending (if applicable)
  • Send signed loan documentation, together with solicitor’s certificate, to bank.
  • On settlement day, arrange for new lending to be made available to you, or arrange deposit of loan to our trust account. Forward the balance loan advance onto you once existing mortgage is repaid (if applicable).
  • Complete settlement with LINZ by registering new Mortgage and Discharge of Mortgage.
  • Report to you with copy of the Certificate of Title showing registration of the new Mortgage.
  • Report to bank with security documents as required.

Please contact our specialist team at DTI lawyers so that we can take complete the refinance of your property. 




 
 
 
Refinancing
About the Author
Nadia Holdcroft
Nadia Holdcroft is a member of the Commercial, Property and Private Client team at DTI Lawyers, Hamilton.