I’m Moving Homes – Can I Keep My Mortgage?
Moving house is an exciting time, especially if you're upgrading to a new home. However, you might be wondering what happens to your existing mortgage when you move.
Thankfully, there's an option called home loan portability, also known as substitution of security. This allows you to transfer your current mortgage to your new property, saving you from the hassle of applying for a new home loan.
There are several benefits to taking your current home loan with you, including:
- Keeping your existing fixed rates (which could be advantageous if they’re lower than current rates).
- Avoiding loan break fees.
- Skipping the loan application process again.
Depending on your situation, home loan portability can be more cost-effective and flexible than starting a new loan.
However, it's important to consider that your current loan and rates might not be the best available. Other banks or lenders could offer better deals, which is where a mortgage adviser can help. They can compare the numbers and find the best option for your needs.
Of course, like most financial products, there are eligibility criteria. These can vary between lenders, and some don’t offer this service at all. That’s why it’s a good idea to check with your mortgage adviser first.
Key Criteria for Home Loan Portability:
- Settlement timing: Both properties (the one you’re selling and the one you’re buying) need to settle on the same day. If your current home sells first, the bank may hold onto the sale proceeds as security until your new home settles. Be aware of the time frames around this process.
- Deposit: You’ll still need to provide a deposit for the new home, so having cash or funds available is essential.
- Valuation: A valuation of the new property will likely be required by the lender.
- Loan amount: In most cases, you’ll need to borrow the same amount or less than your current loan. Some lenders allow top-ups, but this usually involves taking out a separate loan and going through a new application process, which may come with different rates.
- Loan details: The new loan must remain in the same name/s as the original one, with the same borrowers holding the mortgage.
If you're considering a move and wondering whether home loan portability is right for you, feel free to get in touch! We can review your current loan and property goals to find the best lending solution for your needs.