Loan Portability: Moving Your Mortgage to a New Property

Loan portability allows you to transfer your existing mortgage from one property to another without breaking the loan or refinancing. Instead of discharging the mortgage on your current property and applying for a new mortgage on the new property, you port the loan to the new property, maintaining your interest rate and terms.

The primary benefit is rate protection. If you have a fixed rate at 5.0% locked in for 3 more years and you’re moving to a new property, porting allows you to keep the 5.0% rate on the new property instead of refinancing into a new market rate (which might be 6.2%).

Portability is common in mortgages but not universal. Check your lender’s policy upfront. Most major lenders permit portability, but some smaller lenders or specialist products don’t.

The process is typically simple: you apply to port the loan (often online), provide details of the new property, request a new valuation (the lender needs to confirm the new property is sufficient security), and upon approval, the discharge on the old property and settlement on the new property happen simultaneously.

Valuation risk exists. If the new property’s value is lower than the loan amount, the lender might reduce the amount they’ll port or require additional deposit. A scenario: your old property was worth $600,000; you had a $450,000 mortgage. You port that $450,000 to a new $400,000 property. The lender will require you to reduce the mortgage to max 80% LVR ($320,000), forcing you to find an extra $130,000 from savings or refinance separately.

Portability works best when you’re buying a property of equal or higher value than your current property.

Some lenders permit “split portability.” You port $350,000 of a $450,000 mortgage to the new property and pay off the remaining $100,000 from the sale proceeds of the old property. This is useful when you’re downsizing but want to retain the rate benefit on the larger portion.

Timing is critical. Portability requires that the new property settlement and old property discharge happen on the same day (or within days). If there’s a gap (e.g., you’ve already settled the new property and haven’t sold the old property), you can’t port; you’ll need a bridge loan or separate financing for the gap.

Rate protection ends if you port to a much smaller loan. If you’re porting to a significantly lower balance, some lenders allow you to keep the rate; others re-assess and might offer a different rate. Confirm portability terms upfront.

Break costs can apply to portability in some circumstances. If you’re porting a fixed rate to a property at substantially different LVR or where the new property is riskier (e.g., commercial), the lender might view it as breaking the original loan and charge break costs. Unusual situations warrant clarification with your lender.

Portability is a powerful tool for buyer confidence. If you know you can port an attractive rate to a new property (without refinancing risk or rate changes), you can make offers on new properties with confidence.

The alternative to portability is refinancing, which involves discharge, new application, new valuation, and new rate. Refinancing takes 3–4 weeks and may result in a higher rate if market rates have risen. Portability is faster (2 weeks typical) and preserves your rate.

Disclaimer: This article provides general information only and should not be taken as financial or legal advice. Portability terms, valuation requirements, and timing constraints vary by lender. Confirm portability options before making purchasing decisions.