How to refinance a non-bank first mortgage back to a bank in NZ

You borrowed against your property from a non-bank lender because your returns were behind or your statements didn’t tell the whole story. That was a sensible bridge. Now the books are in order and you’d like the loan back with a bank. The catch is that getting out is a sequence, not a single application, and doing the steps in the wrong order is how people end up declined twice.

Why is the bank a different test from the non-bank?

A property-backed non-bank lender mostly asks: is there enough equity, and is the exit believable? A bank asks a different first question: can this business show, on paper, that it services the debt from its own income?

That means the bank is reading:

• filed GST and income tax returns for the last two years or so;
• recent bank statements that match those returns;
• your credit file (see what NZ lenders see on your credit report);
• any IRD balance, and whether it’s on an arrangement;
• the property, through a valuation.

So the work between now and the application isn’t about the property. It’s about the first four.

What order should I fix things in?

This is the sequence that tends to work, because each step unlocks the next.

1. File anything outstanding. Missing GST or income tax returns stop a bank assessment before it starts. If you haven’t done this yet, our guide on getting GST returns up to date before you borrow goes period by period.
2. Get your IRD position clear. Pull a statement from myIR. If you owe a balance, either pay it or have an instalment arrangement in place and being kept to. A bank will take an arrangement that’s being honoured more kindly than a balance that’s drifting.
3. Let two or three cycles of GST run on time. One on-time return doesn’t tell a story. A run of them does, and the filing dates are visible in myIR. IRD’s GST filing page lists the due dates.
4. Tidy the account the business runs through. Separate personal and business spending where you can. A bank reading three months of statements shouldn’t have to decode what’s what.
5. Check your credit file for errors or old listings and fix what’s wrong.
6. Only then ask a bank, or a broker who deals with banks.

Notice what’s not on the list: shopping around first. Applying to a bank before steps 1 and 2 is the most common way a decline gets onto your file for no benefit.

What should I check in my current loan before I start?

Your non-bank loan offer and mortgage terms decide what leaving costs and when you can go. Find these and note the answers:

Question	Why it matters
Is there a minimum term?	Leaving early may be blocked or costed
Is there an early repayment fee, and how is it worked out?	Part of the real price of moving
How much notice must you give?	Sets the earliest settlement date you can commit to
Is interest capitalised or prepaid?	Affects the payout figure
What are the discharge or exit fees?	Added to the payout
Is there other security, such as a guarantee or a PPSR registration?	Each has to be dealt with too, see PPSR registration on a business loan

Ask the lender for a payout statement dated for the settlement day you’re aiming at. Don’t work from last month’s balance.

If the numbers show that moving costs more than a few more months would, that’s a legitimate answer. Staying put on a plan with dates is better than leaving at a loss.

Will a bank treat a business loan on my house like a home loan?

Not necessarily. Banks sort borrowing by purpose, and a loan taken for business reasons but secured on a home can land in a different box from an ordinary residential mortgage. That affects what they ask for.

One piece of market context: the Reserve Bank announced on 14 October 2025 that it would ease its loan-to-value limits from 1 December 2025, reported by RNZ, with its debt-to-income settings kept in place. Those rules are aimed at residential lending, so whether and how they apply to your particular loan is a question for the bank. Ask directly, and ask early.

What documents will a bank want for the refinance?

Expect most of this. The document checklist builder will build a list for your structure.

• Filed returns and, for a company, financial statements (see which structure you borrow through);
• GST returns for the recent periods;
• 3 to 6 months of business and personal statements;
• a myIR statement showing what, if anything, you owe;
• your current loan statement and the mortgage terms;
• rates notice, insurance and, for a commercial property, lease details;
• ID for every borrower and guarantor.

If your records are still thin, a low doc route might be the stepping stone rather than a bank. Our guide on preparing a low doc income declaration explains what that takes.

Not sure whether you’re bank-ready yet? Check your options and a person will go through your paperwork with you.

Illustrative example

A plumber in Whanganui took a $300,000 non-bank first mortgage over his commercial workshop when two years of income tax returns and several GST periods were outstanding. Eighteen months later the returns are filed, the GST has run on time for six periods, and an IRD instalment arrangement for an old balance is nearly paid. His loan terms need 30 days’ notice and carry a fee in the first two years, which he checks against a payout statement. He then asks a bank for a first mortgage on the workshop. The bank reads the filed returns, matches them to his statements and orders a valuation. The bank’s lawyer arranges settlement, and the old mortgage is discharged at the same time. Illustrative only.

How does the old mortgage actually come off the title?

You don’t remove it yourself. At settlement the bank’s lawyer and yours work together: the new mortgage is registered and the old one is discharged, both through LINZ’s Landonline system. LINZ’s own guidance for practitioners says a replacement mortgage instruction that mentions the old mortgage being discharged isn’t enough alone: the lawyer must have the existing lender’s own authority to discharge.

What that means for you:

• Tell your non-bank lender early that a refinance is coming, so their authority isn’t what holds up settlement.
• Make sure the payout figure and the settlement date match.
• Check any other registrations the old lender holds, such as a general security over the business’s assets, are released too.

Independent legal advice is worth the cost here: it’s a lawyer’s job to read the early repayment terms and make sure the old security is fully gone.

What if the bank says not yet?

It happens, and it’s useful if you ask what the gap is. Typical reasons are a return that was filed recently and has no history behind it, statements that don’t match the returns, too little equity after costs, or a credit listing still showing. Each has a fix, and some are quick.

Meanwhile, you aren’t stuck. Staying with the current lender while you close the gap is a valid plan, as long as you aren’t paying for it twice. Our guide on using property when your books are behind covers planning that exit before you borrow, and the first mortgage and second mortgage pages explain how the structures differ.

Mistakes to avoid

• Applying before the returns are filed. The decline isn’t worth it.
• Committing to a settlement date without a payout statement.
• Forgetting notice periods, so you pay for an extra month.
• Leaving the old security in place after settlement because nobody chased it.
• Not telling your accountant. They can produce the figures a bank wants quickly.

Work out which door is open for you

Getting back to a bank is a good goal, and for most owners it’s reachable once the paperwork catches up. If you’re not sure which step you’re on, or you want to know whether a bank, a low doc option or staying where you are makes most sense, we’d like to hear where you are.

The enquiry takes about 60 seconds, and asking won’t touch your credit file. We don’t send your details to a pile of lenders: one person reads your situation, then calls you to talk it through. Fill the form in accurately, including the current loan and what’s outstanding with IRD, so the first option we suggest is one that fits.

See if you qualify →