Refinancing: What you need to know before you sign on the dotted line

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With interest rates showing no signs of falling, many people are considering refinancing their property. This guide will help you navigate the refinancing process.

Break fees

Break fees are charged by your current lender if you pay off your loan before the agreed-upon term is up. When considering refinancing, make sure you ask your bank for an estimate of your repayment figure, including any break fees involved This will help you weigh up whether or not to refinance, and avoid any surprises down the line.

Amount to borrow

Next, work out how much you need to repay so you know how much you need to borrow. Keep in mind that when you refinance, you will usually be required to repay all existing lending with your current bank, not just your home loans. This often includes credit cards, overdrafts, and revolving credit facilities that also need to be repaid at the same time.

Cash contribution

When considering which bank to go with, think beyond the interest rates they can offer you. Negotiating a cash contribution can often help to cover break fees and legal costs, but note that the cash contribution is often paid to you some time after settlement (usually 5-10 working days). You’ll need to ensure you have borrowed a sufficient amount to cover all repayment costs.

Lawyer involvement

It is important to get your lawyer involved in the refinancing process early on.

This will ensure that they can work with your timeframe and can get the ball rolling with discharging your existing mortgage and reviewing loan documentation from the new bank when it arrives.


Be sure to find out what security the bank needs as well. If the lending involves a company or trust, guarantees may be required which have additional legal requirements. In some cases, independent legal advice may be necessary.


Let your lawyer know if there are any existing guarantees to be released, as these aren’t necessarily released when you change banks unless specifically requested.


Finally, insurance is another important factor to keep in mind. The new bank’s interest needs to be noted on your insurance policy, and this can hold up settlement if not done in time. Your new bank will need to see a certificate of currency of insurance noting their interest as mortgagee before they advance funds.

Keep in mind that the loan application process can take some time, rates will need to be negotiated and loan documents must be prepared by the bank and sent to your lawyer. You’ll need to review them with your lawyer, sign them, and have them sent back to the bank for processing before settlement can take place. Starting the process early and discussing the timeframes with the bank/broker and your lawyer can help you avoid any delays.

If you need assistance with refinancing your property, our friendly team of experienced local property lawyers are happy to help.

Our thanks to Courtney Clarke for writing this article, which was first published in the Mahurangi Matters in May 2023.