Refinancing your Mortgage – how does it work?

A couple purchased their property four years ago and at the time of their purchase decided they would fix their loans for two years.  Their two loans are now both due for re-fixing and they are considering their options.  They had heard that another bank had competitive rates but had no idea where to start with changing banks.

An option for this couple would be to complete a refinance.  A refinance is when you are change your current lending to a new bank, which from a legal perspective, involves discharging the current mortgage on the title to your property and registering a new one.

If you have a trust or company owning your property, there will also be guarantees that will need to be released, and new guarantees put in place. 

Currently, with interest rates being so low, many people will be considering refinancing.  Most banks will also give you a cash contribution, which you can use towards payment of any break fees for loans at your current bank, in the event that your current loan is not due for re-fixing.

In addition to speaking with a mortgage broker, or the bank directly, it pays to get in contact with your legal advisor.  They will be able to advise you regarding the legal side of the process and raise any issues that you may need to be aware of for your particular situation.




Laurie Pallett
Senior Registered Legal Executive
Wellington