News & Views

Refinancing Your Property

REFINANCING - IS IT A GOOD IDEA OR A BAD IDEA?

Many people ask themselves should I refinance my mortgage?  This is a very good question, and each person’s situation is going to be different, so it is not a simple question to answer. But there are some things to consider. Firstly, you should always consider why you are refinancing your mortgage? There may be a very good reason that makes good financial sense, but sometimes it’s an emotional decision based on an experience with your existing Bank i.e. a bad Bank experience. Like many decisions, there are benefits and negatives to refinancing. There are early break fees, which will be imposed by a Bank, and if you were given a cash contribution by your Bank (see below), you may have to repay it if your refinance is inside a certain timeframe.

KEY REASONS TO REFINANCE YOUR MORTGAGE

Three Key Reasons Why People Refinance

1. Your Relationship with your Existing Bank Has Broken Down

People have relationship breakdowns and sometimes this happens with business relationships too. It doesn’t necessarily mean anyone is in the wrong, but sometimes the Bank’s staff just think differently to you, and sometimes it is easier to start fresh with another Bank. Or, sometimes people have had a bad financial patch and their banking and/or credit history might be slightly tarnished. The existing Bank might not be as helpful as they could be, and therefore starting a new relationship with a new Bank might be the best thing to do.

2. Your Bank Won’t Help You

Every Bank has a slightly different way of looking at things, and it is common for one Bank to not let you to do something, when another Bank will let you. More often than not this is not personal, and simply comes down to each Bank’s policy at that time, and their willingness for risk depending on the global and domestic markets at the time. This situation mostly arises where there is something a little out of the ordinary, for example: you may be self-employed, or you receive inconsistent income, or you are a little older, or you have had some previous history or you just have an unusual situation.

3. You Are Not Getting a Good Deal

We all want to be treated fairly by the people we deal with and a Bank, or any other lender, should always treat you fairly. The Banking Ombudsman’s office has been tasked with investigating the conduct of Banks and Banks are very conscious of this most of the time. However sometimes this is not the case.  It’s not always possible to get the best home loan interest rates, but your Bank should always be trying to offer you a competitive rate. The role of a mortgage broker is to help ensure that a Bank offers you a good and fair home loan interest rate that is competitive in the market at the time you are seeking it.

THERE ARE ALWAYS COSTS TO REFINANCING

When you Refinance, you Can Expect Costs

When refinancing, you can expect legal costs for your lawyer to do not only the conveyance itself, but to also do what the Bank instructs your lawyer to do in order to ensure you to receive your loan funds. Costs include: legal fees to effect a discharge your existing mortgage and repay your old Bank loan, prepare loan and legal documents and register your new mortgage on your property's record of title with LINZ with your new Bank. There are also compulsory LINZ registration fees (called disbursements) to achieve this on your property's record of title. These costs are, of course, passed onto the client. Disbursements include: discharge mortgage and mortgage registration fees, record of title searches, post registration title searches and guaranteed searches which are required by your new Bank with your loan documents. Prior to granting their lending approval, your new Bank may also require an up to date registered valuation before agreeing to lending anything to you. If so, you should always find out which registered valuer the Bank uses as Bank’s will only accept valuations from certain valuers on their approved “list” of registered valuers.  This could be costly if your Bank rejects a registered valuation from a valuer that isn’t on their “list”.

CASH CONTRIBUTION

Sometimes your new Bank may help you to cover some of the refinancing costs for legal fees and valuations. These are known as “cash contributions” and can be a significant amount so it is worth investigating what your new Bank will offer you with your mortgage broker, or the Bank if you are going direct. The snag is that Banks expect to then “lock you in” for up to three years. If you refinance again within that timeframe, the Bank may ask you to repay the cash contribution back to them. Mortgage brokers should be seeking not only the best interest rate for you, but also the best cash contribution a Bank is prepared to offer you for your business. The amount of a cash contribution is most often based on the amount of the lending, but that is not always the case.  

A mortgage broker worth their salt will investigate all lending options on offer to you and then explain to you the available interest rates and terms, the overall lending cost for each, the securities the Bank will want, the broker's commission rates and then negotiate the best lending package for you considering your current circumstances. What’s key is that you and your broker ensure you are getting the best from your home loan. When refinancing, it’s also a good time to investigate debt consolidation for all other debt, such as store and credit cards and vehicle/personal loans, as these are usually at a much higher interest rate, and can save you thousands of dollars in interest.  

MORTGAGE REFINANCE CALCULATOR

Many Banks and mortgage brokers provide a mortgage refinance calculator to help you crunch the numbers before moving to the next stage. Contact us, as your local property lawyers in West Auckland, for a range of Henderson, Titirangi, Kumeu, Westgate, New Lynn, West Harbour, Hobsonville Point, Albany, and Glen Eden mortgage brokers that we work with and know they are of top quality.

WHY USE A MORTGAGE BROKER?

Mortgage brokers are paid a commission by a Bank to bring them new business. The total commission is a percentage of your lending. Some brokers are also aligned to particular Banks, which isn't ideal for you as the customer. However, the amount of/percentage of a mortgage broker’s commission must, by law, be disclosed to you. What's important is that the broker does not have a particular loyalty to only one or two Banks, but instead they canvas a range of lenders for you. Ethically and legally they are obliged to work in your best interests.  We have repeatedly acted for property and refinancing clients going from one Bank to another and for a multitude of reasons. We have therefore worked with a range of West Auckland, North West and Waikato based mortgage brokers. We hand selected only the best to refer our clients to. Why? Because the mortgage brokers that we recommend to our clients have demonstrated to us their high level of ethics, professionalism and experience in the banking industry. Given this, our clients can rely on: high standards of ethics and professionalism, and confidence that their broker is: reliable, reputable, experienced, honest and are working in soley for your best interests. Ethics and a client’s best interests are the foundation of our legal practice. So, it’s important to us, and our clients, that we refer to only the best.

So, if you are refinancing your property, and need a property lawyer, or a mortgage broker, simply give us a call at Gina Jansen Lawyers. We are based in Henderson in West Auckland. Our phone number is (09) 8695820 or you can email us at admin@ginajansen.co.nz to discuss the refinance of your property.  

Gina Jansen Lawyers are based at 9C Moselle Ave, Henderson, West Auckland but provide nationwide legal services with offices by appointment in Raglan and Ngaruawahia in the Waikato. Gina Jansen is an Accredited Specialist of the Property Law Section of the New Zealand Law Society. The above article is not legal and/or financial advice and is intended as a guide only and cannot be relied upon as legal advice. Legal advice specific to your circumstances should always be obtained. Our legal services include: property, conveyancing, trusts, estate administration, wills and enduring powers of attorney, relationship property settlements, divorce, Inland Revenue tax debts and disputes, bankruptcy, liquidation, commercial and business law. We welcome enquiries by phone or email.  We can provide referrals to a highly recommended group of chartered accountants, insurance brokers, financial advisers, mortgage brokers. Contact us for details by phone on 09 8695820, 0800 544508,  or refer to our website https://www.ginajansen.co.nz.    

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