Moving residences while keeping your current loan. Is it possible? Yes. It’s called mortgage portability. Learn all about the whats and hows in this blog.

Want to understand more about how it works? Get help from a mortgage broker in Sydney.

Now, onto the blog.

What Is Mortgage Portability?

This means taking your current loan with you when you move. You “port” it over to your new property instead of closing one loan and starting a new one. This feature can be helpful if you’re satisfied with your loan’s current terms. Like the interest rate or any attached features. But keep in mind that portability is not guaranteed. Your lender has to approve it first. They may also come with specific conditions.

How Does Mortgage Portability Work?

Are you set with your decision? You’ll need to start by checking with your lender about the process. They will evaluate your new property to ensure it fits their guidelines. Portability also requires you to settle both properties within a specific time frame. This is typically between 30 and 90 days. Is there a delay? Does the new property not meet the requirements? Then portability might not be an option.

In a successful portability transfer, the remaining balance on your current mortgage is shifted over to the new property. Timing is key—simultaneous settlement of both properties is usually required. Working with a mortgage broker in Sydney can help coordinate this process, aligning the sale and purchase to meet your lender’s portability conditions.

Advantages of Mortgage Portability

Cost savings. This is the biggest advantage yet. You can avoid exit fees and new application fees with this loan. That’s because you’re not closing the loan and starting another. This is also great for homeowners with fixed-rate loans. Where early exit fees can be substantial.

Another advantage is the ability to keep your current interest rate. This can be a significant saving if rates have increased since you first took out the loan. Mortgage portability also allows you to retain features you may have set up. Such as an offset account or redraw facility. This flexibility can make moving homes a smoother financial process. Especially if your existing loan is structured in a way that supports your financial goals.

Disadvantages of Mortgage Portability

Portability often limits you to your existing loan amount. This means you may need to secure additional funding if the new property costs more. This second portion could be subject to different terms or a higher interest rate.

Timing can also be a hurdle. Lenders usually require simultaneous settlement of your old and new properties, which can be challenging to coordinate. Any delay could result in complications with the portability process, potentially requiring you to seek alternative financing. Additionally, the new property must meet the lender’s criteria, and if it doesn’t pass valuation, portability may not be approved, making it less flexible than other options.

Eligibility Criteria for Mortgage Portability

Not all loans are portable. And lenders often set specific criteria. For instance, some lenders only allow portability for fixed-rate loans. But others permit it for variable-rate loans as well. Loan type is essential to review. As it can impact your eligibility and any fees involved.

The new property must also pass your lender’s assessment. This includes a valuation to confirm it meets the lending standards. Mortgage portability also requires the timely settlement of both properties within a set period. This timeline can vary by lender. Confirm these details early in the process. Ask your lender or mortgage broker in Sydney

Is Mortgage Portability Right for You?

Are you on a fixed interest rate? Want to avoid reapplying for a new loan? Have interest rates gotten higher since you took out your loan? Then porting your existing rate can save you from paying higher rates on a new loan. However, it’s worth assessing whether your current loan terms match your financial goals and the specifics of your new property.

Consider your long-term plans as well. If you’re upgrading to a larger property or need a more flexible loan structure, portability may not be the best fit. Timing and convenience are also factors. For some people, the ease of porting a loan with no need for a new application can make portability worthwhile, but if you face hurdles with valuation or timing, exploring alternatives may be wise.

Alternatives to Mortgage Portability

Portability doesn’t suit your needs? There are several alternatives you can look into. Refinancing is one option. It allows you to shop for a loan with a different lender. Often at a better rate or with added features. Refinancing may involve fees. But it offers flexibility that portability lacks.

You can also look into bridging loans. It lets you buy a new property before selling the old one. But this is a short-term solution. Though they come with specific repayment requirements. Lastly, you can also sell your current property. Settle the mortgage after selling. Take out a new loan on the next property. It’s sometimes a simpler option than coordinating a portability arrangement.

Steps to Port Your Mortgage

Have you decided that mortgage portability suits your situation? Start by discussing it with your lender or a mortgage broker in Sydney. Your broker can confirm eligibility and explain the process. Include any fees or requirements. Next, provide information about your new property. The lender will need to assess it for valuation and risk.

If everything checks out, work with your lender to set a coordinated settlement date for both properties. Timely coordination of the sale and purchase is essential for a smooth portability process. Once the settlement is completed and the lender approves, your mortgage will be ported. This means you’ve successfully transferred it to the new property with minimal disruption.

AFMS Group: Supporting Your Mortgage Portability Needs

Professionals are pros for a reason. We know the ins and outs of mortgage portability. So do you want to make the process easier? Work with us!

Moving homes? Planning to refinance? Simply curious about your mortgage options? Our experienced team is here to help. Leading you to the best path for your needs.

Eager to learn more about how we can support? Call a mortgage broker in Sydney today.