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by Ruby Manukia – BA, LL.B, LL.M (Hons), PhD

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Refinancing a mortgage is a strategic financial decision that helps you lower interest rates, reduce loan repayments, access equity, and improve overall cash flow. Whether you're consolidating debt, releasing equity, or taking advantage of market conditions, refinancing can be an effective way to optimise your financial position.

However, before switching lenders, it's crucial to evaluate the costs, benefits, and potential risks associated with refinancing. Engaging a lawyer for refinancing ensures that the process is legally sound, helping you navigate lender requirements, mortgage discharge, and compliance obligations.

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Key Considerations Before Refinancing

Before starting the refinancing process, consider the following factors:

• ‍Fixed vs. Floating Rates –  Weigh the benefits of fixed versus floating interest rates in line with your financial goals.
• Loan Terms & Repayment Structure – Review the loan period, repayment structure, and potential early repayment penalties.
• Break Fees – If you're on a fixed-term mortgage, check whether early repayment fees apply.
• Lender Requirements – Different lenders have varying eligibility criteria, such as credit assessments and income verification.

Why you need a Lawyer for Refinancing

Refinancing isn’t just about securing a better deal – it involves legal and financial risks that need careful assessment. A refinancing lawyer will ensure:

• There are no encumbrances or restrictions on the property that could affect the refinancing.
• The new lender’s specific requirements are satisfied.
• Any legal risks or obligations are identified before finalising the loan.
• You understand the key aspects of your proposed lending structure.
• Your existing mortgage is discharged from the record of title with Land Information New Zealand (LINZ).
• Your new mortgage is correctly registered on the record of title with LINZ.

At NZ Legal, we handle the legal side of the refinancing process, ensuring that your refinancing transaction proceeds smoothly and efficiently.

‍Step-by-Step Refinancing Process

1. Timing and loan structuring
It’s worth considering when you want to refinance your property to ensure that you receive funds from your new lender in sufficient time to repay your existing lender – e.g. factor in when you are coming off fixed rates and when higher floating rates may automatically apply unless you refix. Once you have a preferential refinance date, you can assess the best loan structure and lender.

‍2. Work With a Mortgage Advisor
Navigating mortgage options can be overwhelming. We suggest that you engage a mortgage advisor to help you out with the process, compare the various banks and negotiate the best deal (e.g. a cashback, more on this point below). Mortgage advisors are paid by the banks, so their services come at no cost to you—why not take advantage? If you need help finding one NZ Legal has a trusted network of advisors which we can connect you with.

‍3. Discharge of Your Existing Mortgage
Once you have selected a bank for refinancing and initiated the legal process, your mortgage lawyer will coordinate the discharge of your existing mortgage. This involves formally contacting your current lender to request the mortgage discharge and obtaining the final repayment amount.

‍4. Registering the New Mortgage
Once the existing mortgage is discharged, the new mortgage will be registered over the property. This involves filing the necessary documents with LINZ to ensure the new lender’s security interest is properly recorded. A lawyer facilitates this process and the new lender’s name will be recorded on the record of title for the property.

‍5. Signing Key Documents
As part of the refinancing process, you will be required to sign several key documents, including:

1. Loan agreement with the new lender
2. Cash contribution agreement with the new lender
3. Authority & Instruction (A&I) form to discharge the previous mortgage and register the new mortgage with LINZ

‍6. Updating Home Insurance
One component of the refinance process that you will need to arrange is updating your home insurance to reflect the new lender’s financial interest in your property. It’s crucial to ensure your insurance is accurate should anything unforeseen happen to your home.
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To do this, you will need to obtain an insurance certificate that specifies your new lender as the ‘interested party’ on the policy from the refinance date. This insurance certificate is submitted to your new lender along with the executed loan agreement prior to the refinancing date.

‍7. Understand Cash Contributions & Incentives‍

Many lenders offer cash incentives to encourage refinancing, which can range from a few thousand dollars (e.g., a $5,000 cash contribution) depending on the loan size and lender policies. These contributions are typically paid into your nominated bank account following completion of the refinance.

However, beware that such incentives often require you to remain with the bank for a specified period (e.g., three years), and leaving early will trigger a repayment obligation. Always review the terms before accepting an offer.
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‍8. Completing AML (Anti-Money Laundering) Compliance

Lenders and legal professionals must complete AML checks before proceeding with refinancing. This includes:

• Providing proof of identity (passport, driver’s licence).
• Verifying address details (utility bill, bank statement).

‍9. Understanding Refinancing Costs

Refinancing involves several costs, including:

• Refinancing Legal Fees – Solicitor fees for handling the mortgage discharge and registration, including title and Guaranteed Title Search (GTS) fees.
• Lender Fees – Mortgage discharge fees, application fees, valuation fees, and settlement fees which lenders may charge.
• LINZ Fees – Government charges for mortgage registration and discharge, including pre-settlement discharge and post-settlement registration fees.

‍Final Thoughts

Refinancing can be a beneficial financial move, but it requires careful planning and execution. By understanding the process, risks, and associated costs, borrowers can ensure a smooth transition to a better mortgage structure. Always seek legal and financial advice to tailor your refinancing strategy to your specific needs.

At NZ Legal, we specialise in legal refinancing services and work closely with a network of experienced mortgage advisors to ensure seamless and efficient outcomes.

Ready to refinance? Contact NZ Legal today for expert guidance on securing the best mortgage solution for your needs.