Transferring a mortgage to another property, also known as mortgage portability, allows homeowners to move their existing home loan from one property to another without refinancing.
This can be a convenient option for those looking to upgrade, downsize, or relocate while keeping their current loan terms, interest rates, and repayment structure. However, not all mortgages are portable, and there are specific eligibility requirements, fees, and conditions set by lenders.
This guide explains how mortgage portability works, the criteria you must meet, potential costs involved, and the steps required to successfully transfer your mortgage to a new property.
I. Can I Transfer My Existing Mortgage to a Different Property?
Yes, many Australian lenders allow mortgage portability, which means you can transfer your existing home loan to a new property. This option helps borrowers avoid breaking their loan contract, which could result in expensive fees. However, mortgage portability is not automatic, and lenders have specific conditions you must meet.
The key points to know about mortgage portability include:
- Same Loan, Different Property: You keep your existing loan terms, including the interest rate and repayment structure, while applying it to a new home.
- Eligibility Requirements: Your lender will assess whether your current mortgage and financial situation qualify for portability.
- Time-Sensitive Process: Some lenders require the sale and purchase to happen simultaneously.
- Lender Approval is Required: Even if your loan allows portability, the lender must approve the transfer based on the new property’s value and your financial position.
Not all home loans offer portability, so it is essential to check with your lender before assuming this option is available.
II. What Are the Eligibility Criteria for Porting a Mortgage in Australia?
Lenders have specific conditions that borrowers must meet to transfer a mortgage to another property. While requirements may vary, common eligibility criteria include:
- Like-for-Like Loan Terms: The new property’s value and type should be similar to the original one. Some lenders may not approve a transfer if the property type changes significantly (e.g., switching from a house to an apartment).
- Same Borrowers on the Loan: You cannot change ownership structures when porting a mortgage. If you originally took out the loan with a partner, both names must remain on the new property title.
- Loan Balance Limitations: Some lenders only allow portability if the new loan amount matches the remaining balance of the old mortgage. If you need to borrow more, you may have to refinance instead.
- Property Valuation: Lenders will assess the new property to ensure it meets their lending standards. If the property’s value is lower than the previous one, you may need to make up the difference with a cash deposit.
- Loan Account Must Be in Good Standing: Borrowers must not have missed payments or be in financial hardship at the time of transfer.
- Simultaneous Settlement Requirement: Some lenders require the sale of the old property and the purchase of the new one to settle on the same day. If there is a gap between transactions, you may need a bridging loan.
Meeting these requirements increases the likelihood of your mortgage transfer being approved. However, it is always best to check with your lender for their specific criteria.
III. What Costs and Fees Are Involved in Transferring a Mortgage to Another Property?
While mortgage portability can help you avoid refinancing fees, there are still costs involved. Understanding these fees will help you decide whether porting your mortgage is the best financial move.
Common costs include:
- Loan Portability Fee: Some lenders charge a one-time fee to transfer a mortgage to another property. This can range from a few hundred dollars to over $1,000.
- Valuation Fee: Lenders require a professional property valuation before approving a mortgage transfer. This fee typically costs between $200 and $600.
- Settlement and Legal Fees: You may need to pay conveyancing or legal fees for handling the transfer of the mortgage and property title. These costs vary depending on your solicitor or conveyancer.
- Government Fees: If your new property is in a different state or territory, you may incur additional government charges, such as registration fees.
- Lenders Mortgage Insurance (LMI) Transfer: If you initially paid LMI and your new loan amount is over 80% of the new property’s value, you may need to pay LMI again.
- Break Costs (for Fixed Loans): If you are on a fixed-rate mortgage and need to adjust the loan terms to fit the new property, your lender may charge break fees.
Although transferring a mortgage may be cheaper than refinancing, these fees can add up. It is essential to compare the costs before deciding.
Also Read: Understanding Costs When Buying a House in Queensland
IV. How Does the Process of Mortgage Portability Work?
Transferring a mortgage to another property involves several steps. While the exact process depends on your lender, here is a general outline of how it works:
- Check with Your Lender: Contact your bank or mortgage broker to confirm if your loan is portable and what conditions apply.
- Apply for Mortgage Portability: Submit a formal request for mortgage portability and provide details about the new property.
- Property Valuation: The lender arranges a valuation to assess whether the new property qualifies for the loan.
- Lender Approval: If the new property meets eligibility criteria, the lender approves the transfer and issues new mortgage documents.
- Settlement Coordination: Your conveyancer or solicitor arranges settlement for both the sale of your old property and the purchase of the new one.
- Mortgage Transfer Completion: Once settlement is finalised, your loan is transferred to the new property, and repayments continue under the same terms.
The entire process can take a few weeks to complete, depending on the lender’s processing times and how quickly the sale and purchase transactions align.
A Smarter Way to Handle Your Mortgage Transfer
Transferring a mortgage to another property can be a cost-effective way to keep your current loan terms while moving to a new home. However, mortgage portability has strict conditions, and not all borrowers qualify.
Understanding your lender’s requirements, fees, and the process will help you decide whether this option suits your situation.
If you are unsure whether mortgage portability is the right choice for you, consulting a legal expert can make all the difference.
Speak to a Conveyancing Expert at CJC Law Today
Thinking about transferring your mortgage to another property? CJC Law specialises in property transactions and mortgage transfers, ensuring a smooth and hassle-free process.
Our experienced conveyancers provide expert guidance on lender requirements, legal paperwork, and settlement coordination. Contact us today to discuss your mortgage transfer options and secure your new property with confidence!
