Home loan portability: transfer your mortgage to another property
A home loan is a decades-long commitment. But what happens if you decide to move because your family is growing, you want to downsize, or to get closer to work?
A 2023 report from Domain revealed that the median tenure for houses in Australia is 9 years, or just 8 years for those in units. That’s a lot shorter than the length of most home loans, which often last between 20 to 30 years.
So, if you find yourself in this situation, can you move a mortgage to another house?
Thanks to a fairly common home loan feature, known as loan portability, you can sell your current home and buy a new one, while keeping the same mortgage.
What is loan portability?
Home loan portability is a feature that lets you transfer your existing home loan to another property. Also known as a security swap, loan portability switches out the property currently securing your home loan for a new one.
Using loan portability means you won’t have to refinance your home loan or complete the application process all over again. It can also help you avoid paying new application fees, although some lenders charge a security swap fee.
Not every home loan has a portability feature, so you will have to contact your lender to double-check that it’s an option for you.
How does loan portability work?
When you use your loan’s portability feature, you will usually have to make a like-for-like home purchase, where the value of the properties is of equal or greater value. Your lender will perform a property valuation to help determine this.
If the value of your new property is worth more than the original loan amount, then you may also need to apply for a loan increase.
Most people will fit into one of two categories when it comes to loan portability, depending on the timeline of their new property purchase:
- Simultaneous settlement.
- Deferred settlement.
Simultaneous settlement
Simultaneous, or ‘same time’, settlementis used when you’re buying and selling at the same time.
In this case, your lender will help you negotiate so that the settlement dates on both properties line up, allowing you to simply transfer your mortgage across and continue making uninterrupted repayments.
Deferred settlement
Deferred settlement is for situations where you sell your home, but are yet to buy or settle on a new one. Your lender may still let you take advantage of your loan portability but will give you a set amount of time in which to complete the process (e.g. 6 months).
Throughout this time, you will have to continue making your regular repayments.
How to transfer a mortgage to another home
To get the home loan portability process started, you’ll need to contact your bank or lender to check if your loan is eligible for it, and to get the ball rolling.
A mortgage transfer to another property isn’t as simple as just calling them up and requesting it, of course. It typically involves signing a release of property form, organising valuations, and signing contracts of sale for both properties.
Your lender or bank will then lay out the finer details of porting your home loan. It’s at this point that you may want to compare home loans to make sure you’re getting a good deal on your current one. After all, you might be moving homes, but you’re bringing the same mortgage with you.
Pros and cons of loan portability
Pros
- Convenience: Porting your mortgage saves you the time and energy of exiting your current mortgage and applying for a new one. You’ll also be able to keep all the features you’ve gotten accustomed to.
- You can keep your fixed rate: If you have a fixed-rate home loan, you won’t have to terminate the contract and can therefore avoid paying break fees, which are often expensive.
- Save money: There are plenty of upfront costs involved when signing up for a home loan. Porting your mortgage means you won’t have to sign a new loan contract and can keep that money in your pocket.
Cons
- Limitations: Your lender might require your new property to be of equal value or higher than your old one, in which case you’ll be limited in the kinds of property you can purchase.
- Simultaneous settlement: the settlement dates of your property sale and purchase will likely need to line up, which might be difficult to pull off if there are delays in processing your documents.
- Same lender and interest rate: It goes without saying, but retaining your current mortgage means staying with the same lender. This can be a downside if the deal you signed up for wasn’t competitive to begin with.
Is it better to port my home loan or refinance it?
What’s best for one person might not be the best for you. That being said, if you like your home loan and your lender, you’re able to keep paying similar mortgage repayments and save on the costs associated with getting a new loan, then porting your mortgage might look like a good option for you.
On the other hand, if your current home loan doesn’t have the features you want, is charging you more than you could be paying elsewhere, and you can save money by refinancing, then opting for a refinance home loan might suit you better.
For more information about home loan features, browse our home loan guides hub. And if you’re in the market for a new loan, visit our home loan comparison page.
FAQs
Can I purchase my new property before I sell my current one?
If you purchase a new property before you sell your old one, you may need to apply for a bridging loan. In some cases, you may still be able to port your existing home loan, but it’s worth checking this with your lender before you get the process started.
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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