A Guide to Understanding Mortgages and Refinancing
22 September 2024

What is a mortgage?



A mortgage is a loan specifically designed for purchasing real estate. It involves borrowing money from a lender, typically a bank, to buy a property. The property itself serves as collateral for the loan, meaning the lender can take possession of it if the borrower fails to repay the loan as agreed. Mortgages are usually repaid over a long period, often 25 years, through regular monthly, or fortnightly, payments.

How we help with mortgages


Navigating the mortgage process can be complex, but we are here to assist you every step of the way:

  1. Receive loan documentation: We will check all necessary loan documents from your lender to ensure everything is in order.
  2. Meet with you to execute the required documents: We will arrange a meeting to go over and sign all the necessary paperwork.
  3. Arrange drawdown of your lending: We will coordinate with your lender to ensure the funds are released at the appropriate time.
  4. Register new mortgage: We will handle the registration of your new mortgage with Land Information New Zealand (LINZ), ensuring all legal requirements are met.


What is a priority sum?

A priority sum is an amount specified in the mortgage that takes precedence over other claims or charges on the property. It ensures that the lender has the first claim on the property up to the specified amount in case of default.


Costs involved in a mortgage

When taking out a mortgage, several costs may be incurred, including:

  • Application fees: Charges for processing your mortgage application.
  • Registration fees: Costs associated with registering the new mortgage with LINZ.
  • Legal costs: Fees for legal services provided during the mortgage process.

 

What is refinancing?

Refinancing involves replacing your existing mortgage with a new one, typically to take advantage of better interest rates, change the loan term, or access equity in your property. This process can help reduce your payments, shorten the loan term, or provide funds for other financial needs.


How we help with refinancing

Once you have made arrangements with your new lender, we assist with the following steps:

  1. Receive loan instructions: We will obtain the necessary instructions from your lender.
  2. Meet with you to execute the required documents: We will arrange a meeting to sign all the necessary refinancing documents.
  3. Arrange discharge of your existing security: We will coordinate the release of your current mortgage.
  4. Handle the drawdown of the new lending: We will ensure the funds from your new loan are properly disbursed.
  5. Take care of the repayment of your existing mortgage: We will handle the repayment of your current mortgage with the funds from the new loan.
  6. Register the discharge and new mortgage: We will manage the registration of the discharge of your old mortgage and the new mortgage with LINZ.


Costs involved in refinancing

Refinancing can involve several costs, such as:

  • Early repayment fees: Penalties for paying off your existing mortgage early, if applicable.
  • Release fees: Charges from your existing bank for releasing the current mortgage.
  • Application fees: Charges for processing your new mortgage application.
  • Registration fees: Costs for registering the discharge and new mortgage with LINZ.
  • Legal costs: Fees for legal services provided during the refinancing process.


By understanding the mortgage and refinancing processes and the associated costs, you can make informed decisions that best suit your financial needs and goals. We’re here to guide you through each step, ensuring a smooth and efficient experience.


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