Legal information for property buyers and sellers
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A bank loan, also commonly called a mortgage, is a financial product offered by a range of lenders (including banks and other financial institutions) used by many property buyers to finance the purchase of a property. Taking out a bank loan means that the property purchaser does not need to have the full purchase price available in cash providing that they have the means to repay the loan over an agreed period of time. Bank loans used to finance the purchase of property are often repaid over terms of up to 30 years.

What is a mortgage?

Strictly speaking, a mortgage is the way in which a lender (bank or other financial institution) secures a loan. A notice is attached to the title of the property that indicates that the lender is able to sell the property to recover the loan if the terms of the loan are not met by the owner.

The mortgage is not the loan itself but rather the means that the lender has to guarantee repayment.

Changing the loan or mortgage terms

If the terms of a loan are changed, the mortgage usually remains on the property to secure the new loan conditions. If the ownership of the land changes and the lender still requires security, a new mortgage may have to be completed.

Where a property owner wants to repay one bank loan and take out a new loan with another financial institution, the first mortgage will need to be discharged. A new mortgage would need to be registered against the title with the new financial institution. This is often referred to as refinancing.

Need more information?

The experienced team at Property Law Service can assist with all of your mortgage and refinancing legal requirements. Please enquire online or contact us on Freephone 0800 PPTYLAW (0800 778 952) for New Zealand enquiries; +64 6 3705102 for International enquiries