Tips when refinancing

A refinance is when you are changing your lending with a bank.  This is generally secured over a property but could also be secured against an asset.  A refinance is usually done to increase the amount of lending you have available or to take advantage of better interest rates.

1. People often want to refinance quickly.  We recommend that you let your legal advisor know when you are in the process of finalising your new lending with the bank.  This way your legal advisor can get the ball rolling from their side too.  This includes contacting your existing bank to arrange for the discharge of mortgage to be sent to them.
   
   
2. Make sure you know what is to be repaid to your existing bank and ensure your new lending is adequate to cover these costs.  To do this you will need to know if your loan is fixed or floating.  If your loan is fixed then the bank could charge you a break fee (which can sometimes be substantial).  A bank will often require all lending (including the current loans, any break fees, credit cards and overdraft facilities) to be repaid as part of the refinance. 
   
   
3. You will need to update your insurance so that your new mortgagee is noted on your insurance policy.  This will need to be provided to your legal advisor before your refinance can be completed.  Your new bank will need to be satisfied with the sum insured value noted on your insurance policy too.  It is a good idea to let the bank know what your sum insured value is as soon as possible so that you don’t have any unforeseen delays with your refinance.  If you are unsure what your sum insured value is, your insurance provider will be able to give you this information.
   
   
4. Know what security your new bank requires.  For example if your lending involves a company or a trust then often the bank will require guarantees to be put in place.  This will ensure that there are no surprises when you come to sign the documents with your legal advisor.
   
   
5. Let your legal advisor know if you had existing guarantees in place with your previous bank.  Your previous bank will not necessarily release any existing guarantees it is holding unless these are specifically requested.