Loan Portability: Moving House Without Changing Your Mortgage

When you sell your home and buy another, you typically discharge your existing mortgage and take out a new one. But there's another option: loan portability. This feature lets you transfer your existing loan to your new property, potentially saving you time, money, and hassle.

What Is Loan Portability?

Loan portability (also called "substitution of security" or "security swap") allows you to:

• Keep your existing home loan
• Release it from your current property
• Reattach it to your new property
• Maintain your current rate and terms

How It Works

The Process:

1. You sell your current property
2. Instead of discharging the loan, you "port" it
3. The mortgage is removed from sold property at settlement
4. The mortgage is registered against new property
5. Your loan continues under existing terms

Timeline:

• Typically needs to happen simultaneously or within short window
• Sell and purchase settlements often coordinated
• Some lenders allow short gap between transactions
• May require bridging arrangements if timing differs

When Loan Portability Makes Sense

Scenario 1: Protecting Your Fixed Rate

Situation:

• You have a great fixed rate with 2 years remaining
• Break costs would be substantial
• You want to move but keep your rate

Benefit:

• Avoid potentially thousands in break costs
• Maintain locked-in rate until term ends
• No new loan establishment costs for fixed portion

Scenario 2: Keeping Loan Features

Situation:

• Your loan has features no longer offered (grandfathered)
• Professional package with excellent terms
• Strong relationship with existing lender

Benefit:

• Retain features unavailable to new customers
• Continue established relationship
• No new credit assessment (in some cases)

Scenario 3: Time Efficiency

Situation:

• Quick settlement required
• Complex situation that might delay new loan approval
• Don't want to risk finance falling through

Benefit:

• Faster process than full new application
• Less documentation typically required
• More certainty of approval

When Portability Might NOT Be Right

Better Rates Available Elsewhere

If your current loan is uncompetitive:

• Market may offer better rates
• Switching costs might be worthwhile
• Opportunity cost of staying is real

Do the Math:

• Break costs + new loan costs vs.
• Savings from better rate over loan term

Need to Borrow More

If you're upgrading significantly:

• Existing loan limit may not be enough
• New loan might be simpler
• May need top-up loan anyway
• Single new loan often better than split structure

Current Lender Is Problematic

If you're unhappy with your lender:

• Moving is your chance to switch
• Don't port just to avoid paperwork
• Consider long-term relationship value

Loan Structure Needs Changing

If your needs have changed:

• Different product might suit better
• Opportunity to restructure
• Fresh start may be valuable

The Portability Process Step-by-Step

Step 1: Check Eligibility

Contact your lender to confirm:

• Portability is offered on your product
• You meet any policy requirements
• What documentation is needed
• Any fees that apply

Common Requirements:

• Loan must be in good standing
• New property must meet lender criteria
• Loan amount within existing approval
• Borrower circumstances haven't deteriorated

Step 2: Property Assessment

Your lender will evaluate the new property:

• Acceptable property type
• Satisfactory valuation
• Adequate security value
• No unusual risks

Properties That May Not Qualify:

• High-density apartments (some lenders)
• Rural or remote locations
• Non-standard construction
• Commercial or mixed-use
• Very small or very large properties

Step 3: Financial Assessment

Lender may reassess your situation:

• Current income verification
• Confirm employment status
• Check credit history
• Verify serviceability still meets requirements

Note: This is usually lighter than a new application, but some assessment is standard.

Step 4: Coordination of Settlements

Timing is Critical:

• Sell settlement and buy settlement must align
• Loan transfers between properties
• May need bridging if timing differs
• Work closely with conveyancer and lender

Step 5: Documentation and Registration

Final Steps:

• Discharge from old property
• Registration on new property
• Government fees paid
• Loan continues under existing terms

Portability vs. New Loan Comparison

Portability Costs

Typical Fees:

• Portability/variation fee: $200-$500
• New property valuation: $200-$600
• Government registration: $150-$200
• Legal/settlement costs: Standard

What You Avoid:

• Break costs (if fixed rate)
• Discharge fee from old lender
• Establishment fee at new lender
• Full credit assessment

New Loan Costs

Typical Fees:

• Discharge fee (old): $150-$400
• Break costs (if fixed): Variable
• Application fee (new): $0-$600
• Valuation fee (new): $0-$600
• Legal/settlement: Standard

What You Gain:

• Fresh rate negotiation
• New lender cashback offers
• Updated product features
• Clean start

Example Comparison

Scenario: Fixed rate with 18 months remaining, $5,000 break cost

Portability Route:

• Portability fee: $300
• Valuation: $400
• Registration: $180
• Total: $880

New Loan Route:

• Break cost: $5,000
• Discharge: $350
• New loan establishment: $400
• Valuation: Free (promotion)
• Registration: $180
• Less cashback: -$2,000
• Total: $3,930

Winner: Portability by $3,050

Special Portability Situations

Porting with a Top-Up

If your new property costs more:

Option A: Port and Top-Up

• Port existing loan to new property
• Take additional loan for extra amount
• May have two separate loans
• Check if this is available

Option B: Refinance Entire Amount

• Calculate if break cost is worth it
• Single new loan may be simpler
• Better rate might offset costs
• Consider long-term

Porting to a Cheaper Property

If you're downsizing:

• Port loan amount up to new property value
• Pay down excess with sale proceeds
• Check minimum loan requirements
• Consider if refinancing makes more sense

Porting with Changed Circumstances

If your situation has changed:

• Job loss or income reduction
• New dependents
• Changed credit history
• May face full reassessment
• Portability not guaranteed

Porting Between States

Moving interstate:

• Same lender, different state
• Usually possible but check
• Different government fees apply
• May involve different branch/team

Questions to Ask Your Lender

About Portability Availability

1. "Does my specific loan product include portability?"
2. "Are there any restrictions on the types of properties I can port to?"
3. "What's the maximum loan amount I can port?"
4. "Is there a time limit between selling and buying?"

About the Process

1. "What documentation will I need to provide?"
2. "Will I need to go through a full credit assessment?"
3. "How long does the portability process typically take?"
4. "Can I port if my circumstances have changed since I took out the loan?"

About Costs

1. "What fees apply for portability?"
2. "Are there any hidden costs I should know about?"
3. "How do these costs compare to refinancing?"
4. "Are any fees negotiable?"

Portability Pitfalls to Avoid

Pitfall 1: Assuming Portability Is Available

Not all loans have this feature:

• Check your loan contract
• Confirm with your lender
• Don't assume based on other products

Pitfall 2: Not Comparing to Refinancing

Portability isn't always the best option:

• Run the full comparison
• Consider long-term costs
• Factor in rate differences
• Include all fees and benefits

Pitfall 3: Timing Mismatch

Settlement timing is critical:

• Coordinate with conveyancer
• Plan for contingencies
• Understand bridging options
• Build in buffer time

Pitfall 4: Changed Property Requirements

Your new property must qualify:

• Get valuation early
• Understand lender requirements
• Have backup plan if issues arise
• Consider property type carefully

Pitfall 5: Assuming Rates Stay the Same

While portability maintains your contract:

• Variable portion can still change
• Fixed rate continues until term ends
• Future rates are not guaranteed
• Still subject to lender discretion on variable

Making Your Decision

Choose Portability If:

✅ You have a competitive fixed rate with significant break costs ✅ Your loan has valuable grandfathered features ✅ You need to move quickly ✅ New property value is similar to current ✅ You're happy with your lender

Choose Refinancing If:

✅ Better rates are available ✅ You're increasing loan amount significantly ✅ You want different loan features ✅ You're unhappy with current lender ✅ Break costs are low or zero

Get Professional Advice If:

• You're unsure which option is better
• Your situation is complex
• Significant money is at stake
• You need to move quickly
• You want comprehensive comparison

The Bottom Line

Loan portability can be a valuable tool when moving house, particularly if you have a competitive fixed rate. However, it's not automatically the best choice. Every situation requires individual analysis.

At Ding Financial, we help you compare portability against refinancing to find the best solution for your move. We'll calculate the true cost of each option and recommend the path that saves you the most.

Contact us when you're planning a move, and we'll ensure you make the most informed decision about your mortgage.