# HL-Q029: Borrower journey A new lender has approved my mortgage switch. What needs to happen before the old loan is paid off and the new one starts? Borrower: Homeowner considering a switch [Study](https://nzbrands.ai/research/banking/home-lending/) · Collected 11 October 2026 ## chatgpt Answer ID: 0420814c-4459-4105-b7ff-a4c8de5c2917 In New Zealand, once your new lender has approved your mortgage switch, the next stage is usually handled by your solicitor or conveyancer, working with both lenders. Approval is not the same as settlement: the old mortgage generally remains in place until the new loan funds and the existing loan is repaid. ## What needs to happen before the switch is complete? 1. The new lender completes its final checks Your lender may need to confirm any outstanding conditions, such as income or employment details, property valuation, insurance, and the required loan documents. You may need to sign the new loan agreement and mortgage documents. 2. Your solicitor arranges the legal paperwork Your solicitor reviews the new mortgage documents and arranges the legal steps to register the new lender's mortgage against your property. If you're switching lenders without selling your home, this is generally a refinance rather than a property sale. 3. The old lender provides a final payout figure Your solicitor obtains the amount needed to repay the old loan on the settlement date. This can include outstanding principal, accrued interest, discharge or administration fees, and any early repayment or break fee if applicable. 4. A settlement date is agreed Your solicitor coordinates with both lenders to ensure the new loan funds are available when the old loan is due to be repaid. Any cash contribution, cashback conditions, or funds you need to provide are also confirmed. 5. Settlement takes place The new lender advances the funds, usually through your solicitor. The old mortgage is paid off, and the legal registration of the new mortgage and discharge of the old mortgage are handled as part of the transaction. 6. Your new repayments begin The new loan follows its agreed repayment schedule. Check the first payment date, repayment amount, interest rate and loan structure, and confirm that any old direct debit or automatic payment is cancelled only when appropriate. ## What you should check now Before settlement, I’d confirm these five things with your solicitor or mortgage adviser: - All approval conditions are satisfied and the new lender is ready to release the funds. - The payout figure is confirmed, including any fixed-rate break fee or other exit costs. [Mortgages and home loans](https://www.consumerprotection.govt.nz/help-product-service/borrowing-money/mortgages-and-home-loans)[Move your home loan to ASB](https://www.asb.co.nz/home-loans-mortgages/switching-banks-home-loan-guide.html) - You know the settlement date and when the old loan will be repaid. - You understand the new repayment arrangements, including the first payment date and whether repayments will be weekly, fortnightly or monthly. - Any cashback or switching costs are clear, including whether you need to repay a previous cashback incentive or pay legal fees. [Mortgage advice](https://www.fma.govt.nz/consumer/getting-advice/mortgage-advice/)[Switch your home loan](https://www.asb.co.nz/home-loans-mortgages/switching-banks-home-loan.html) You can also read your new lender's [refinancing guide from BNZ](https://www.bnz.co.nz/support/home-loans/managing-your-loan/refinancing) for an example of how the process works in New Zealand. One important point: don't independently cancel your old mortgage repayments before settlement is confirmed. Keep the existing payments going as required until the old lender confirms the loan has been repaid and your solicitor confirms settlement has completed. ## How long does it take? It depends on whether the lender has finished its checks, the paperwork is signed, and the solicitors have everything they need. Your approval may be in place well before the actual settlement date. Have you already signed the new loan documents, or have you only received conditional/unconditional approval so far? That will help me explain what stage you're likely at and what still needs to happen. --- ## gemini Answer ID: 18cf13fb-1a98-4f48-8ed9-bf1bc67fbc83 Congratulations on getting your mortgage switch approved! Moving to a new lender is a great way to secure a better interest rate or more favorable loan features. In New Zealand, the transition between your old lender and your new lender is handled primarily by your **property lawyer or conveyancer**. Because your property's title acts as security for the loan, everything must be legally coordinated to happen simultaneously. --- ### What Needs to Happen Before Settlement Day 1. **Appoint a Solicitor and Sign Legal Documentation** * Your new lender will send loan documents and instructions directly to your lawyer. * Your lawyer will arrange a meeting with you to go through the agreement, sign the loan contract, and complete an **Authority and Instruction (A&I) form**. This form gives your lawyer the legal right to interact with Land Information New Zealand (LINZ) on your behalf to update your property title. 2. **Obtain the Final Payout Figure from Your Old Bank** * Your lawyer will contact your current (old) bank to request a formal **discharge statement** or exact payout figure. This figure includes the remaining principal, any accrued interest up to settlement day, and crucially, any **break fees or early repayment charges** if you are breaking a fixed-rate term early. 3. **Handle Any Shortfalls or Cashback Clawbacks** * **Shortfall:** Compare the old loan payout total with the new loan amount. If your new loan is smaller than what you owe your old bank (or if your new loan doesn't completely cover the payout figure plus break fees and legal costs), your lawyer will calculate the difference. You must deposit this shortfall into your lawyer's trust account prior to settlement. * **Cashback Clawback:** If you received a cash incentive/reward from your old bank when you first signed or refixed with them, check their terms. Many banks have a clawback period (often 3 years); if you leave early, they may require you to repay a pro-rata portion of that cash. 4. **Update Your House and Contents Insurance** * New lenders in New Zealand strictly require proof that they are noted as the interested party (mortgagee) on your house and contents insurance policy. * Have your insurance provider issue a **Certificate of Currency** noting your new bank, and send this to your lawyer ahead of time. --- ### What Happens on Settlement Day On the agreed-upon settlement day, your lawyer orchestrates a seamless financial and legal chain reaction: * **Funds Drawn Down:** Your new lender transfers the new mortgage funds directly into your lawyer's trust account. * **Old Loan Repaid:** Your lawyer uses those funds (plus any top-up funds you provided for shortfalls or fees) to completely pay off your old loan with your previous bank. * **Discharge & Registration (LINZ):** * Your old bank issues an electronic discharge document confirming the debt is settled. * Your lawyer lodges this discharge alongside your new lender's mortgage instrument electronically through the LINZ system. * **The Handover:** The old mortgage is officially removed from your property's Record of Title, and your new lender's mortgage is registered in its place. Once registration is complete, your lawyer will send you a final reporting letter confirming that the switch is finished and that your old account is closed. --- ## ai-mode Answer ID: 8ceeb036-9619-45b9-af0d-85671a698851 Congratulations on getting approval for your mortgage switch! In _New Zealand_ , moving your lending from your current bank to a new lender involves a coordinated settlement process managed largely by your property solicitor/conveyancer and your mortgage adviser (if you are using one). Before the old loan is fully paid off and your new loan kicks off, several critical steps must happen: * * **Appoint a Solicitor:** You will need a property solicitor or conveyancer (if you haven't already appointed one) because changing lenders involves registering a new mortgage on your property title and discharging the old one. * **Review and Sign Loan Documents:** Your new lender will send formal loan offer documents and guarantee forms to your solicitor. You will need to meet with your solicitor to sign these documents and go through independent legal advice if required. * **Request a Discharge Authority:** Your solicitor will request a **Discharge of Mortgage** statement and payout figure from your current (old) lender. This figure calculates the exact amount required to clear your old loan, including any applicable break fees if you are breaking a fixed-rate term early, or any clawback/repayment of a previous cash contribution/incentive. * **Arrange Insurance:** Your new lender will require proof of current **home and contents insurance** (and sometimes life/income insurance depending on the lending criteria). You must have your new lender noted as the interested party/mortgagee on your policy and provide a certificate of currency to your solicitor or lender. [Holland Beckett] * **Set Up Transaction Accounts:** You’ll typically need to open a working transactional account or set up direct debits with the new bank so your ongoing mortgage payments can be automatically deducted when the new loan starts. * **Final Financial Balancing:** Your solicitor will calculate any remaining financial shortfall or surplus. If your new loan amount is slightly different from the payout figure of your old loan (due to changing interest, legal fees, or adjustments), your solicitor will advise you if you need to deposit "top-up" funds into their trust account for settlement day. * **Settlement and Registration:** On the agreed settlement day, your new lender transfers the new loan funds to your solicitor’s trust account. Your solicitor uses these funds to pay off the old lender in full, the old lender releases/discharges their charge over your property, and your solicitor registers the new mortgage with Land Information New Zealand (LINZ). [Holland Beckett] * If you'd like, let me know: * Are you breaking any **fixed-rate terms** early with your current bank? * Do you need a recommendation on what to look for when **updating your house insurance** details? I can share more details on how those specific parts might affect your timeline. --- ## ai-overviews Answer ID: bdf98095-7fe2-4936-a75b-171dc5b454e2 Once your new lender approves your mortgage switch, the process moves into a **legal conveyancing and administrative phase** managed primarily by your lawyer. In New Zealand, a property lawyer or conveyancer is legally required to handle the switch because it involves altering the legal title of your property. The process operates in four major steps before your old loan officially closes: 1\. Loan Instructions Sent to Your Lawyer * **Bank Action:** Your new lender compiles the official loan offer and security requirements and sends these **mortgage instructions directly to your lawyer**. * **Your Action:** You must provide your new lender or mortgage broker with your chosen law firm's details so they can dispatch this paperwork immediately. 2\. Arranging the "Discharge of Mortgage" * **The Request:** Your lawyer contacts your current bank to formally request a **Discharge of Mortgage** and a final repayment statement. * **The Payout Figure:** The old bank will calculate an exact payout figure calculated right down to your intended settlement day. This figure accounts for all principal outstanding, daily interest accrued, and any applicable **early repayment break fees** or previous cashback clawbacks. 3\. Signing Legal Documents & Final Verifications * **The Appointment:** You will meet with your lawyer (either in person or via verified remote signing options) to review and execute the documentation. * **What You Will Sign:** You will sign the new lender's loan agreement and an **Authority & Instruction (A&I) form**, which legally permits your lawyer to change the property title electronically via Land Information New Zealand (LINZ). * **Compliance Checks:** Your lawyer will complete mandatory **Anti-Money Laundering (AML)** identity verifications. * **Home Insurance Update:** You must contact your home insurance provider and request a **Certificate of Currency** that formally names your _new lender_ as an interested financial party. Your lawyer needs this on file before the new bank will release any funds. 4\. Settlement Day (The Switch) * **The Wire Transfer:** On the agreed settlement day, your new bank deposits the new loan funds into your **lawyer’s trust account**. * **Paying the Old Loan:** Your lawyer transfers those funds directly to your old bank to completely pay off and clear the old mortgage. * **Updating the Title:** Your lawyer electronically registers the discharge of the old bank's security interest with LINZ and replaces it by registering your new lender's security against your property title. * **Surplus or Shortfalls:** If your new loan is larger (e.g., you are getting extra cash out or receiving a cashback incentive), your lawyer pays the remainder to your bank account after deducting their legal fees. If there is a shortfall, you must transfer that shortfall into the lawyer's trust account _before_ settlement day. * * * To ensure a smooth transition, let me know: * Have you already **selected a property lawyer** or conveyancer for this? * When does your **current fixed-term end** (or has it already rolled over to a floating rate)? * Are you expecting any **cashback incentives** from the new lender to help offset the legal fees?