Move House But Keep Your Loan
Buying and selling a home can be stressful for most of us. Not only do you hope to get the best price for your house but you also want to pay the least possible for your new home. We often sell our home and feel pressured into buying as soon as possible so that settlement can happen on the same day. However if your loan is "portable" there is no reason to rush in.
How Do I Make It Work?Eight out of ten variable products in the market allow you to transfer the security you have against your loan, making it portable. What this means is if you decide to sell your home, you no longer have to close the loan out and get a new loan approved when you buy again. All you need to do is replace the existing house as a security with a term deposit to the extent of your outstanding amount. For example, if you have a loan secured by your home and you decide to sell it but want to keep the existing loan open, here are the steps to follow:-
- Contact your bank and confirm you have a portable loan
- Inform the bank that you intend to sell the home
- On settlement date provide the bank with funds to the amount of your loan outstanding as a term deposit
- The bank will swap the security of your loan with the term deposit and release the house to the new buyer
- As long as the bank is holding the Term Deposit, your loan will be kept open. There is no need to rush in and buy your new home. You can spend time in finding what you want
- Once you find the property of your choice, you can use the term deposit toward settlement
- Your loan will start to accrue interest again
- When you swap the security (property) with a term deposit a fee may apply (around $300)
- Your term deposit earns interest for the time being
- When you buy the home and swap the term deposit with the new home another swapping fee may apply ($300)
- Your borrowings should not exceed the initial amount borrowed
- When you do sell and buy a new home the difference in price if any will not be funded over and above the original amount borrowed for the first home
| Company | Product | Rate | AAPR for 250k over 25 years | Mortgage Portable | Port. Transfer security fee | Star Rating | Apply |
|---|---|---|---|---|---|---|---|
| Homestar Finance | Standard Variable | 7.14% | 7.17% | Yes | $250 |  |  |
| Rate Busters | Fast Trak Variable | 7.32% | 7.42% | Yes | $250 | | |
| Money Saver Home Loans | Premium Saver | 7.35% | 7.41% | Yes | $300 | Not rated | |
| Loan Australia Corp | Discount Saver Variable | 7.45% | 7.65% | Yes | Nil |  | |
| Meridian Money | AAA Pro Pack | 7.49% | 7.68% | Yes | Nil |  | |
| Awesome Mortgages | Homeloan Std Variable | 7.50% | 7.54% | Yes | $300 |  | |
| Electronic Loan Company | E Rate Saver | 7.54% | 7.57% | Yes | $350 | | |
| Resident Home Loans | ProPack Variable | 7.55% | 7.64% | Yes | $250 | Not Rated | |
| Resident Home Loans | Resident Home Loan | 7.55% | 7.55% | Yes | $250 |  | |
| Rate Busters | Fast Trak Fee Buster | 7.57% | 7.58% | Yes | $250 | | |
| Amac | Standard Variable | 7.59% | 7.63% | Yes | Nil | | |
| Loan Australia Corp | Flexi-Plus Variable | 7.59% | 7.61% | Yes | Nil | | |
| mecu | Premium Home Loan $500k+ | 7.59% | N/A | Yes | $595 | Not Rated | |
| Meridian Money | AAA | 7.59% | 7.62% | Yes | Nil | | |
| Mortgage Ezy | Discount Variable | 7.59% | 7.78% | Yes | $250 | | |
| MyRate | Advantage Rate >$150k | 7.59% | 7.59% | Yes | $250 | Not Rated | |
| Police CU SA | Discount Variable | 7.59% | 7.69% | Yes | $180 | | |
| Awesome Mortgages | Prime Loan | 7.60% | 7.65% | Yes | $300 | | |
| Dnister Ukrainian Credit | Premier Variable | 7.60% | 7.63% | Yes | $600 | | |
| Source: www.canstarcannex.com.au (28/11/2007) | |||||||
| Note: Portable Standard Variable Loans ranked by Advertised Rate | |||||||
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