Loan Portability – What is home loan portability?
Moving to a new house doesn’t necessarily mean you need a new loan. Consider getting a portable home loan option to help you save on any future upfront costs
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Loan portability is usually standard on all home loans, which means that if you choose to move houses and you like your current home loan, you can take your loan with you. Essentially you can transfer your existing loan to another property without having to go through the process of refinancing, so long as your new property is within the parameters set by your lender.
What is loan portability?
Loan portability is a feature offered on many loans, which allows you to keep your loan when moving to a new property. Rather than refinancing your home loan, you switch the property you're using as security to take the current property off, and add the new property to the loan.
Usually the term of a regular loan is 30 years, so it is very common for people to move houses while they are still paying off a loan. Loan portability saves you the time and cost associated with closing one loan and applying for a new loan, and it allows you to continue with your current loan number, repayment amount and loan term.
How does loan portability work?
When you apply for a home loan you have to pay upfront costs to secure it. These costs can add up and can increase the overall amount you spend on the loan. When you have a portable loan, it allow you to transfer the loan to a new property if you decide to sell one home and buy a new one.
Loan portability can be convenient and can save you money, as it means:
- You don't have to apply for a new loan, saving you application and establishment fees.
- You don't have to change your direct debits and loan numbers.
- Your loan continues on its trajectory - if you are 6 years into a 30-year loan term, so you have 24 years to go, you move your loan with you to the new property, so you continue to have just 24 years left until you own the home outright.
Keep in mind that your current loan might be the cheapest home loan or the most suitable one for you. Needs change over time, so it's important to make sure your loan still offers the best value. For instance, you might have more savings now than you did when you first got the home loan. Those savings could be sitting in an offset account, helping you pay less mortgage interest.
Or, there might be a better value home loan that offers a cheaper interest rate and saves you money. Before you go down the path of loan portability, make sure you compare current home loan offers to make sure you're not paying too much.
The loan portability process - James and his flexible bank
James wants to sell his property before he buys another. His current home loan has a portability feature, saving him the cost and inconvenience of obtaining another loan. He will keep his existing account number and details – and he also has the option of switching his loan from a fixed to a variable or add more funds when he moves into the new property. To port his loan, he can either call his lender, apply online or go into a branch. His lender informs him that there may a number of fees he needs to pay such as:
- Stamp duty
- Legal, setup and utility costs
- Loan portability fees
- Agent fees
Pros and cons of loan portability
One of the main benefits of loan portability is that it will help you save money. This section of the article will explain how loan portability can help you save;
- Establishment fees. When you apply for a loan you will have to pay establishment fees. Depending on the provider, these fees can be over $1000. By transferring your old loan to the new house you will avoid paying these fees.
- Exit fees. When you leave a loan you will usually have to pay exit fees. The exact amount of these fees will vary depending on the provider, however they can be quite expensive. By transferring your loan to the new house you’ll avoid paying these fees.
- Some restrictions. While loan portability is a great way to save time and money it’s important to know whether there are any restrictions when using this feature. Generally, there are no restrictions on the transfer other than the fact you won’t be able to change the loan structure. This will include the number of borrowers and the interest rate. You won’t have to sign a new contact but if you’re borrowing a different amount of money a variation may have to be signed.
- Loan portability fee. Most providers charge you a fee to transfer a loan - around a couple of hundred dollars. Usually, this amount will not change even if you are transferring over a large amount of money.
Loan portability: Things to avoid
There’s a few rules you need to follow before transferring your loan. It’s best to confirm these before doing so with your lender as these are general guidelines:
- Settlement on different days. One of the general rules when using loan portability features is that exchange and settlement for both properties need to occur on the same day. However, this stressful rule varies from lender to lender so confirm this first.
- Changing loan amounts. The loan amounts for the new property cannot change, so if you need extra funds for the new house you will need to make a new home loan application. Some lenders will let you ‘top up’ your loan, so again remember to check with your lender first.
- Lacking documentation. Remember to provide evidence to show that you’re moving places. Documents to include are the Contract of Sale and the Contract of Purchase. Valuation documents must also be shown as acceptable security and comply within the Loan to Value (LVR) ratio. New mortgage documents will also need to be issued with the details of the new property.
Portable home loans comparison
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
More guides on Finder
As lockdown tightens, what relief are banks offering for home loan customers?
Many banks are offering repayment deferrals and a temporary pause on foreclosures for eligible customers.
First Home Buyer’s e-Course Module 1
First home buyers, kick off your journey to home ownership! To take your first step, it starts with you: what is your situation right now?
Pretty Green: Online supermarket with free lockdown delivery, what’s the catch?
The new online supermarket is now offering free delivery for those stuck in lockdown, with no minimum spend required.
How to stake DAI
Find out how you can stake DAI, the decentralised stablecoin from MakerDao, and what the risks and potential rewards are.
Well Home Loans Equity Plus
A review of Well Home Loans’ Equity Plus Home Loan. This is a loan for borrowers with 40% deposits or equity.
loans.com.au Green Home Loan
A detailed review of loans.com.au’s Green Home Loan. Discover the features and benefits of this green home loan.
DeFi guide: How to use MakerDAO and mint DAI
Read our step-by-step guide on the MakerDAO platform. Find out how it works and how to grant loans using cryptocurrency holdings.
AFCA approves $240m in refunds and penalties: Could you be due compensation?
New data reveals AFCA received a whopping 70,000 complaints in the last year generating millions of dollars worth of refunds to Aussies.
More than you bargained for: Only 19% believe you can buy property for the asking price
Prospective homebuyers should brace themselves to pay more than the asking price, according to new research by Finder.
Boost your 2021 tax return: Top tips for a bigger refund
It's tax time! Finder's money writers share their tips to claim deductions on everything from your home office, car and insurance to your mortgage.
Home Loan OffersImportant Information*
Ask an Expert