October 22, 2018
When you're buying a new home, packing up your stuff isn't the only thing you need to consider. Financing the new home a big consideration - and loan portability could remove a lot of the headache.
What is loan portability?
Loan portability is a feature included in many home loans which allows you to take the home loan with you when moving house. That is, the home loan product would remain the same but the property (or support security) on the loan changes to the new property. Of course, your new home will need to fit within the parameteres set by the lender but if it does, it can save a lot of headache when moving house.
What are the benefits?
The main two benefits of using a loan portability feature are time & money.
Time: Loan portability can make financing your new home all the more convenient. There's no need to change your ATM, online banking facilities or account information and it allows you to keep your home loan with the same lender.
Money: When you first apply for your home loan you will need to pay a host of application fees and new loan establishment fees to mention a few. If available, using the loan portability feature on your current home loan will save you money which you would have spent paying those fees all over again. It can also save on 'break costs' with your old home loan, meaning that as you're taking the home loan with you - there's no need to pay many of the exit fees that can come with leaving your home loan early.
Things to remember with loan portability
Values of the new & old property
As mentioned above, your lender may have restrictions or parameters when it comes to the new property and your freedom to enable the loan portability feature. Restrictions may apply to the difference in value of the properties, with some lenders requiring that they are of equal value or that the new property has a higher value than the existing one.
Simultaneous settlement
If you would like to use loan portability, time is of the essence. You'll need to align the settlement date of the new property with the sale of the old one, which can be really tricky. Should they not line up, you might need to have a look at bridging finance.
Refinancing could save you
Sometimes loan portability might be stopping you from taking advantage of savings offered by refinancing. Checking your home loan every two years is a great idea to ensure that you're making the most of what's on offer. Make sure that you talk to your mortgage broker about whether or not refinancing could benefit you before making use of the loan portability feature.
Talk to us today about loan portability
The Mortgage Choice Werribee team would love to help you talk through your options when it comes to moving to your next home, including loan portability, refinancing & bridging finance. There are lots of finance options available.
Talk to us today on 9749 8800 or click on the Contact Us button at the top of the page.
