The process of getting a mortgage, whether for a new home purchase or to refinance an existing loan, doesn’t end with the approval of your loan application. After that, there’s an entire procedure generally called "conveyancing", which mysteriously involves lawyers, and results in paperwork and contracts being "processed".
The conveyancing stage of the refinancing process is often obscure – you sign some documents from time to time, but you don’t actually see what is being done. So what do your lawyers actually do during this stage? What are the many steps and procedures they have to follow to make even the simplest mortgage application or refinancing happen? Here’s a sneak peek into the many things your lawyers do for you when you refinance.
What Happens During the Conveyancing Process
Upon choosing the best offer to refinance your loan, a borrower will choose a law firm or solicitor to seal the deal. Banks usually have a panel of approved law firms, and for minimal hassle, it is usually a good idea to select your lawyer from that panel. Once you’ve selected a law firm from the refinancing bank’s panel, the conveyancing process begins.
1. Taking Instructions from You
Instructing your chosen solicitor basically means meeting with them and informing them of your motive to refinance your mortgage. From there, the lawyers may already send forms you need to answer, inform you of their charges, and get or confirm other relevant information they may need to start processing your transaction.
2. Sending Notice of Loan Redemption to Your Existing Bank
Based on your instructions, your lawyers will reach out to your existing bank to let them know that you’d like to redeem your loan.
They will most likely snail mail or email the bank, containing the bank’s standard Notice for Redemption of Home Loan form that you filled out. Aside from your basic information (i.e., your name, contact info, loan account number, property address) this form would also ask you of your mode of payment, and reason for redemption.
Take note that you have to continuously pay for your monthly repayments even after your lawyers have sent your notice of loan redemption. Or else, you may have to deal with late payment charges, additional interest, or penalties.
3. Receiving Preliminary Loan Redemption Statement
Once your existing bank has received your notice of loan redemption and other initial requirements (if applicable), they will revert to your lawyers with a preliminary loan redemption statement. This document contains the preliminary calculation of the total amount you need to pay on the date of redemption, including the remaining amount you owe on your mortgage account and the processing charges, if any. Some lenders send out preliminary redemption statements at least three weeks before the date of completion.
4. Presiding Over Your Signing of The New Mortgage
From going back and forth with your existing lender and new lender, your lawyers may schedule an appointment with you, so you can sign the required paperwork to finalize your loan redemption and refinancing. This includes the new mortgage documents.
5. Managing Payment of Potential Shortfall
In case the size of your new mortgage is different from the amount you need to pay your existing bank, your lawyers may recommend you to leave some money in your bank account with your existing bank to make up for the shortfall. Once you’ve already redeemed the loan, the existing bank may deduct the shortfall straight from your bank account with them. In case you don’t prefer this arrangement, you may opt for a cashier’s order for payment on the date of redemption.
6. Receiving Final Redemption Statement
Your existing bank may send the final redemption statement to your lawyers early in the morning on the date of completion. Your lawyers may call you to reconfirm the redemption amount as soon as they receive the statement.
7. Lodging of Transactions
At this point, your lawyers will lodge on your property the total discharge of mortgage (TDM) from your existing bank, and the new mortgage deal with the new lender. Some banks may give clients a few days to a few week to collect the TDM, as long as the client has already paid the confirmed redemption amount in full.
8. Advising You on Commencement of New Mortgage Payments
Congratulations! You’ve already paid for the redemption amount, so you can expect your new lender to send you the details of your new monthly instalments, including the commencement of your new due date. You may set up a new bank account with your new mortgage provider for repayments, or you may also pay them through your CPF Ordinary Account (CPF OA).
Mortgage Conveyancing: A Crucial Stage in The Home Loan Process
So you see, a lot goes on behind the scenes in your lawyer’s office, to make it possible for you to finance, or refinance, your mortgage smoothly and legally.
Refinancing a home loan involves legal work, so it’s a good thing that you have conveyancing lawyers to take that entire load off of you! Property legal fees in Singapore vary depending on the experience of the provider and the inclusions of the services, but they usually range from $2,500 to $5,000, give or take. You may also pay this using your CPF OA.
If you want to learn more about mortgage refinancing, or if you need advice and assistance at any stage of your search for a mortgage or when you’re considering refinancing, PropertyGuru’s Home Finance Advisors are more than willing to help. All you need to do is to reach out to us, and one of our advisors will get back to you shortly.Chat with us on Whatsapp Fill up an online form
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