How to transfer a home loan to another person

How to transfer a home loan to another person

There are several reasons why you may potentially have to transfer your home loan to another person. For example, if you own a property jointly with your spouse, ownership will change in case of a divorce. Or, if the owner is seriously ill or has passed away, change in the ownership may be required. If you purchased a home jointly with a family member or friend, later on your financial situation may allow you to buy out the joint owner, which also requires a change in the ownership.

Property ownership is also transferred in case of a sale. However, in this case your home loan won’t be transferred to the new buyer.

Transferring the home loan to another person

When your home’s ownership changes, you may need to transfer the home loan from one person to another. However, this transfer is not possible without the lender’s consent. The financial institution will need to ensure the new borrower is not unsuitable for the existing loan. It is best to find out more about how to transfer a home loan to someone else from your lender.

Property ownership transfer charges

Lenders may allow home loan transfer to another person when the property ownership changes. However, there are some charges related to such ownership transfer, which may include:

  • Stamp duty, calculated on the land valuation
  • Capital gains tax (CGT) may apply if the transfer is for an investment property
  • Transfer of property ownership modifies the mortgage conditions and may entail break fees, especially if you have a fixed interest rate

You may also have to incur valuation and legal fees if the services of a lawyer are required.

Home loan portability

Do you know how to transfer a home loan to a new property? Lenders may allow you to transfer your home loan to another property via loan portability. 

If the new property meets the same eligibility requirements as the old house, lenders will allow you to transfer the loan. The most significant advantage of loan portability is that it avoids refinancing and saves you the trouble of closing the existing loan and applying for a new loan. Moreover, you are able to retain the benefits and features of your existing loan.

While you save on establishment and exit fees, the lenders may levy a loan portability fee. An important thing to remember is that the lender will not allow you to modify the loan structure. This means lenders may not allow home loan transfer from one person to another while transferring the mortgage to a new property.

If there is an outstanding home loan on a property you want to transfer, you will have to notify the lender about the ownership change. You may have to agree to specific alterations to the existing loan documents. You may consult an expert to know more on how to transfer home loan from one person to another.

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Learn more about home loans

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

Who offers 40 year mortgages?

Home loans spanning 40 years are offered by select lenders, though the loan period is much longer than a standard 30-year home loan. You're more likely to find a maximum of 35 years, such as is the case with Teacher’s Mutual Bank

Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

Why is it important to get the most up-to-date information?

The mortgage market changes constantly. Every week, new products get launched and existing products get tweaked. Yet many ratings and awards systems rank products annually or biannually.

We update our product data as soon as possible when lenders make changes, so if a bank hikes its interest rates or changes its product, the system will quickly re-evaluate it.

Nobody wants to read a weather forecast that is six months old, and the same is true for home loan comparisons.

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

What is the ratings scale?

The ratings are between 0 and 5, shown to one decimal point, with 5.0 as the best. The ratings should be used as an easy guide rather than the only thing you consider. For example, a product with a rating of 4.7 may or may not be better suited to your needs than one with a rating of 4.5, but both are probably much better than one with a rating of 1.2.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

How is the flexibility score calculated?

Points are awarded for different features. More important features get more points. The points are then added up and indexed into a score from 0 to 5.

Mortgage Calculator, Property Value

An estimate of how much your desired property is worth.