Switching Banks

Understanding the refinance process

Over the course of your home loan journey, you’ll make many important decisions. One of these may be refinancing your mortgage with a different lender. This guide looks at what’s involved with refinancing your home loan and the things you need to take into consideration before applying.

Why refinance?

Refinancing is the process of repaying your existing home lending and taking out a new home loan with a new bank. The most common reasons borrowers choose to refinance their home loans include:

  • taking advantage of better home loan rates
  • having the option to make lump sum payments outside of current home loan repayment structures
  • wanting new lending outside of an existing bank’s lending criteria
  • the desire to move to a new bank with different services and facilities

How do I go about switching to a new bank?

Before you refinance, think about what your future home loan and banking needs are and find out exactly how much you still owe on your current home loan.

If you’re on a fixed interest rate with your bank, find out what their break cost is, as you’ll have to factor this into the cost of switching.

Once you’ve figured out the total home loan amount you’ll need going forward, you can apply for a new home loan with your preferred lender. Make sure the loan amount you apply for covers the repayment of your existing home loan and includes any top-up you may want.

When you apply, you’ll need to provide certain documents to comply with anti-money laundering (AML) regulations. The Tella changing banks checklist (see below) has a breakdown of the most requested AML documentation you will be asked for.

Once you’ve been approved by a new lender, talk to your existing bank and let them know you’re refinancing and that you need a closing balance. This is the total amount outstanding of all your home lending facilities, including any interest, fees or charges.

You’ll also need to sign new home loan documentation according to the lending terms and conditions of your new bank.

Your new bank is likely to require that your income is credited into a transactional or savings bank account held with them as a condition of your home loan approval. This may also be required as part of any cash incentives that they offer to you.

How can Tella help you refinance?

Tella offers a digital experience unlike any other financial service provider in NZ with home loan specialists who can help every step of the way.

You can use our digital application form to apply from anywhere, anytime, at your convenience. Our calculators and guides are there to help you make an informed decision, and if you need more, Tella’s home loan specialist team is available and ready to help. Just click the chat bubble on the bottom right of this page.

Let us know if you want a referral to a lawyer as part of your refinance journey. We have long-standing relationships with legal professionals who will offer discounted fees for our clients.

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