What Is Home Loan Portability? How Porting a Loan Works

Home loan portability is a loan feature that lets you keep your existing home loan when you sell one property and buy another, rather than closing the loan and taking out a new one. In plain terms, you move the same loan across to a new property. The loan, its balance and often its interest rate stay the same, while the security behind it changes from your old home to your new one. This guide explains how home loan portability works, when porting a home loan can be useful, what it may cost, and how it compares with refinancing, so you can weigh up whether it suits your move.

This is general information only. What suits you will depend on your circumstances and each lender’s criteria.

The guidance below draws on the Australian Securities and Investments Commission, known as ASIC, and its MoneySmart service, the government’s independent money guidance. MoneySmart does not define portability by name, so we explain the feature in general terms and use MoneySmart for the figures and costs that surround a move.

If you are mapping out a move and want the lending side handled with you, the options come together on our home loans hub.

What home loan portability actually means

Porting a home loan means substituting the security on your existing loan. Your loan stays open with the same lender, the same balance and usually the same rate and features, but the property that backs it changes. Instead of your old home securing the loan, your new home does.

Think of the loan and the property as two separate things. Normally, selling your home and buying another means ending one loan and starting another. Portability keeps the loan intact and swaps only the property attached to it. That is why it is sometimes called substitution of security or transferring a home loan to a new property.

Portability is a feature, not a guarantee. Whether a loan can be ported, and on what terms, depends on the loan you hold and each lender’s criteria, so the first step is always to check whether your specific loan offers it.

When porting a home loan can be useful

Porting tends to suit people who are happy with their current loan and simply moving house. If your interest rate, features and lender already work for you, keeping the loan can save the effort and cost of setting up a new one.

It can also matter if you are on a fixed rate. Exiting a fixed loan early can trigger a break fee, and MoneySmart lists that break fee among the costs to weigh up when you change loans. Porting may let you carry a fixed rate across to the new property instead of breaking it, though whether that is possible depends on your lender’s criteria.

A common reason borrowers look at portability is to avoid paying lenders mortgage insurance again. Lenders mortgage insurance, often shortened to LMI, is covered in detail in our guide to what lenders mortgage insurance is. MoneySmart notes that LMI can apply when you have less than 20% equity in your home, so keeping your existing loan rather than starting a fresh one can, in some cases, help you sidestep a repeat LMI bill.

Whether it does depends on your equity and your lender, and the ways borrowers reduce or avoid LMI are set out in our guide on how to avoid LMI.

What porting may cost

Porting is often cheaper than refinancing, but it is not always free, so it pays to ask your lender for the full picture before you commit.

Because porting keeps your loan open, you may avoid some of the fees that come with closing one loan and opening another. MoneySmart lists those switching costs as a discharge fee for closing your current loan, an application fee for setting up a new one, and a break fee on a fixed loan. Avoiding even a couple of these can make a real difference.

One figure worth keeping in view is the spread of rates in the market. MoneySmart notes there can be an interest rate difference of more than 2% in variable home loan rates on the market. If your current rate sits well above what is on offer elsewhere, keeping it through portability may not be the cheapest path, even if porting itself is low cost.

Portability versus refinancing

Porting and refinancing solve different problems. Portability keeps your existing loan and moves it to a new property. Refinancing replaces your loan with a new one, often with a different lender, usually to chase a lower rate or better features.

The right choice comes down to whether your current loan still suits you. If it does, porting keeps a good thing in place through a move. If your rate has drifted above the market, refinancing to a sharper deal may save more over time, even after the costs of switching.

When you compare any new loan against your current one, compare on the same basis. MoneySmart describes a comparison rate as a single figure of the cost of the loan that includes the interest rate and most fees, which is the honest way to line up offers. Our guide on the comparison rate explained goes deeper on what that figure does and does not capture.

You can also lean on the negotiating point MoneySmart raises for switchers. Tell your current lender you are looking at a cheaper loan elsewhere, and to keep your business they may reduce your rate. Having at least 20% equity in your home gives you more to bargain with in that conversation.

How porting a home loan usually works

The order of events when you port a loan tends to follow a clear path, though the detail varies by lender.

Many lenders require both transactions to line up, which is where timing and a simultaneous settlement matter, and where a solicitor or conveyancer earns their keep. MoneySmart’s view is that getting help from a solicitor or conveyancer to review the contract before signing is the best way to avoid costly mistakes. The settlement process explained guide walks through how that day works.

Check the numbers before you decide

Whether you port or refinance, the decision rests on figures specific to you: your rate, your equity, the value of the new property and the costs each path carries. Working out what you can borrow against the new property is a sensible early check, because it tells you whether your existing loan still fits the purchase or whether you need to adjust it.

A borrowing power estimate is a good place to start. It shows the ballpark you are working within before you weigh porting against refinancing.

You can use the borrowing power calculator to get an estimate, then read it alongside your current loan to see how the move stacks up.

Where Finance Lab fits in

Gathering these facts gets the decision on the table. Reading them against your loan, your equity, your timing and a panel of lenders is where it gets personal, and that is where guidance helps. The team at Finance Lab can talk you through whether your loan is portable, how porting compares with refinancing for your move, and which lender criteria you may need to meet.

Frequently asked questions