What is loan portability?
Moving to a new property often requires some serious thought and planning, though, it doesn’t always mean you’ll need to take out a new home loan. Some home loans include a loan portability option, which may enable you to reduce or remove your exposure to further upfront costs.
Loan portability is a feature which essentially allows you to keep your loan when moving to another property without having to refinance. We’ve developed this guide to help you get a better grasp over what portable home loans are and how they can benefit you as a homeowner.
Home loan transfer basics
With more and more Australians looking to move home, lenders have made loan portability much more commonplace. While it might sometimes be favourable to change your home loan in the pursuit of a better rate when you move homes, you shouldn’t feel compelled to if you’re happy with your existing home loan and loan portability is an available feature.
Key points to consider
Taking out a new loan can be burdensome, especially considering the amount of market research you’ll need to carry out to ensure you’re getting the best deal possible. Transferring your home loan from one property to your next may provide you with a convenient way to continue paying for your home loan through your current lender as well as still allowing you to use your existing facilities, such as credit cards, online banking, and avoid the costs involved in refinancing including, establishment fees and exit fees.
A difference in property values
It’s important to note that some lenders do have restrictions in place for homebuyers looking to move property and transfer their existing home loan. Be sure to investigate the terms and conditions of your portable home loan option to find out whether you’ll be required to move to a new property that has the same value as your existing home or if there are any other restrictions. Doing this will enable you to make a more informed choice about what is best for you and your circumstances.
Settlement date alignment is a key consideration when dealing with portable home loans. In order for there to be a successful home loan transfer, you normally need to align the settlement dates of the sale of your existing and the purchase of your future property. This might seem complicated, but with good communication between yourself and your lender you should be able to work towards a solution.
With an ALI Loan Protection Plan, cover is independent of your loan, which means you can still be covered, regardless of whether you decide to utilise your loan portability option or take out a new loan. Cover keeps going even if your loan stops or you pay it off.
If you’d like to learn more about how an ALI Loan Protection Plan could keep you financially secure if you’re unable to generate an income after suffering a serious life event, please contact your local ALI authorised mortgage broker today, or alternatively, request your mortgage protection quote here.
Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSG 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement when deciding if this product is appropriate for you.