‘FAST’ Refinance - how fast, how furious?

So I’m refinancing my home loan and they say I don’t have to worry about paying my annual fees to my current lender which is due mid-Feb.

They say they can do settlement within a week of loan docs signing.

For beginners, how does “Fast Refinance” work and what’s the incentive of Old Lender quickly turning around the paperwork to discharge the loan and transfer the mortgage to New Lender? Will Old Lender hold on to the paperwork before actually closing my loan accounts and charge me annual fees?

 

So once the old lender gets the paperwork from the new lender and see that the loan was credited to zero/positive balance, will they immediately close my loan account therefore not charge me soon-due annual fee?

It may be a minor thing but I want to avoid the loan account annual fee with old lender as much as possible. If there’s a delay I might have to pay it and beg for a refund. I could think of 3-5 pairs of shoes I can buy with the annual fee!

 

Thanks.

Or just think how many Tim Tams that will buy.

 

As mentioned, the loan is paid out plus a small excess. This excess is used for any interest adjustments for the days it takes to administer the refi until the actual payout. Be aware though, there will still be a discharge fee which will be taken from the excess funds. The actual amount depends on the outgoing lender.

 

It’s all about the mortgage (as distinct from the loan)
The new lender will normally want to liaise with the current lender about payout figures, organise a mutually agreeable settlement date and receive a discharge of mortgage before paying over the loan money discharging the loan. This will give the current lender ample time to ring the client and offer incentives to stay and/or to play delaying tactics such as claiming not to have received discharge forms (despite the client and broker fax, mailing and dropping it off 49 times).

With a fast refi what happens is the new lender simply pays out the existing lender based on their estimation of the amount owning. The payout of the loan is done without the incoming mortgage being registered (as would all actually) or receiving a discharge of mortgage. The mortgage would be in a registerable form and held by the income bank – an equitable mortgage if anything goes wrong – but it could not be registered until the old mortgage is discharged – actually it could be registered, but would be behind the current.

 

They might keep the loan open until the discharge of mortgage is received - and charge you the fee. But you could probably get this fee refunded.