Porting your home loan when you sell and buy

What we could and could not verify

We searched Moneysmart, ASIC and related official pages and did not find one that describes porting or portable loans. So we do not say which lenders allow it, what conditions apply, or what it costs. Those are set by each lender in its loan contract and policies. The sections below stick to what official pages do say and turn the rest into questions to ask.

What the official pages do say

Moneysmart's page on fixed and variable rates says "you may be charged a break fee if you switch home loans, sell the property or pay off the loan early". Its switching page lists a break fee on a fixed rate loan, a discharge (or termination) fee when you close your current loan, an application fee on the new loan and other costs. Selling a property is therefore one of the situations where fixed loan break costs can arise, and that is why porting a fixed loan needs a specific answer from your lender.

ASIC's responsible lending guidance says a credit provider must make reasonable inquiries about a consumer's financial situation and requirements, take reasonable steps to verify it and assess that the contract is "not unsuitable". For a new loan or a changed loan, expect the lender to ask about your income and expenses again. Whether a ported loan triggers a fresh assessment is the lender's call, so ask.

Questions to ask your lender

• Is my loan portable, and is that written in my contract?
• What conditions apply: a time limit between sale and purchase, a minimum or maximum new loan, a property type or location limit?
• Will I need a new application, a new valuation and a new serviceability assessment?
• If the new property costs more, how is the extra borrowing priced, and is it a separate loan?
• What is the LVR on the new property, and does it push me into lenders mortgage insurance?
• If my loan is fixed, is the fixed rate kept, and is a break fee payable?
• What fees apply to porting, and what is the cost if I close the loan instead?
• What happens if the sale settles before the purchase? See bridging loans.

Porting or refinancing

The comparison comes down to numbers. Get the porting cost and the rate you would keep in writing. Then look at advertised rates for similar loans on the home loan rate board, including fixed rates if you are fixed, and work out the saving using our refinancing guide. If your fixed term is near its end anyway, see what happens when your fixed rate expires.

Mistakes to avoid

• Assuming your loan is portable. Confirm it before you sign a contract to buy.
• Exchanging contracts before you know the break cost. Fixed loan break costs can be significant, so get the figure.
• Not planning the settlement dates. A gap between sale and purchase can change what is possible.
• Forgetting the new LVR. A higher LVR can change the rate and the insurance.

RateSonar shows advertised rates, not what a customer will be charged. It does not recommend lenders, and policies differ, so check your own lender.