Moving house in Perth is a major undertaking. The excitement of a new home is often accompanied by a long and stressful to-do list, from packing boxes and organising removalists to updating your address everywhere. One of the biggest items on that list is typically arranging the finance for your new property, a process many people dread. It’s a common assumption that buying a new home automatically means you have to go through the entire complex process of applying for a brand new mortgage from scratch.
But what if there was a shortcut? For some homeowners, there is. It’s a feature known as mortgage portability, and it allows you to effectively “take your existing home loan with you” to your next property. While it can be a highly convenient option, it’s not always the best financial move. This guide will explain exactly what mortgage portability is, how it works, its key advantages, its potential downsides, and help you decide if it’s the right choice for your Perth move.
What is Mortgage Portability?
Mortgage portability is a feature offered by some lenders on certain home loan products. It is designed to make the process of buying and selling property simpler for existing customers.
The Core Concept: Moving Your Loan, Not Starting Anew
In essence, portability allows you to keep your current home loan account—with its existing interest rate, features, and loan number—and simply transfer the security from your old property to your new one. Think of it like moving your mobile phone number to a new handset; you keep your existing plan and number, but it’s now attached to a new device. The loan itself is “portable,” moving with you from one home to the next.
How it Differs from Refinancing
It’s crucial to understand the difference between porting your loan and refinancing. Refinancing is the process of paying out your existing home loan in full and taking out a completely new one. This can be with your current lender or, more commonly, with a new lender offering a better deal. Portability, on the other hand, means you are keeping the very same loan account active with your existing lender.
The Main Advantages of Porting Your Mortgage
The appeal of mortgage portability lies in its ability to save time, money, and hassle in specific circumstances.
Simplicity and Ultimate Convenience
This is the primary selling point of portability. Because you are not creating a new loan from scratch, the amount of paperwork and administrative effort can be significantly reduced. For someone juggling the many stresses of moving house, this streamlined process can be incredibly attractive, making the financial side of the move much simpler.
Avoiding Break Costs on a Fixed Rate Loan
This is the most powerful financial reason to port a loan. If you are in the middle of a fixed-rate term and you sell your property, you would normally have to pay out the loan and incur substantial “break costs.” These fees can run into thousands, or even tens of thousands, of dollars. Mortgage portability allows you to avoid these fees entirely by keeping your fixed-rate loan active and transferring it to the new property.
Keeping a Great Interest Rate or a Unique Loan Package
If you were lucky enough to secure your loan years ago with a fantastic interest rate or as part of a special package with unique features that are no longer offered, portability allows you to hold onto that great deal. In a rising interest rate environment, keeping a legacy low-rate loan can be a major advantage.
The Potential Downsides and Why Portability Isn’t Always Best
While portability sounds convenient, it comes with significant trade-offs that every Perth homeowner must consider.
The Biggest Risk: Missing Out on a Better Deal
This is the most critical disadvantage. The home loan market is intensely competitive, and lenders are constantly offering sharper interest rates to attract new customers. By choosing to stick with your current loan purely for convenience, you could be missing out on a much lower interest rate from another lender. Over the long term, being on a higher rate could cost you far more than any break fees you might have saved.
Approval is Not Automatic
Porting your loan is not a guaranteed right. Your lender must still conduct a full assessment and formally approve the new property you are buying, ensuring it is suitable security for the loan. Furthermore, you will almost certainly have to re-verify your current income and living expenses to prove that you can still comfortably afford the loan under today’s lending standards, which may be stricter than when you first applied.
Complications Arise if You Need to Borrow More
If your new Perth home is more expensive and you need to increase your total loan amount (a “top-up”), the process becomes more complex. Many lenders will require you to submit a full new loan application for the additional funds, which can negate the original benefit of convenience that portability offers.
Is Mortgage Portability Right for Your Perth Move?
The decision to port your loan or refinance comes down to a simple cost-benefit analysis.
Portability Might Be a Good Idea If…
- You are in the middle of a fixed-rate period and the break costs are substantial.
- You have a unique, older loan package with an exceptionally low interest rate that cannot be matched in the current market.
- You are buying and selling for a very similar price and need to facilitate a very fast and simple transaction.
You Should Probably Refinance Instead If…
- Your current interest rate is uncompetitive compared to what new customers are being offered by other lenders.
- Your existing loan lacks modern features that you now want, such as a flexible 100% offset account.
- You need to borrow a significantly larger amount of money to fund your new home purchase.
Conclusion
Mortgage portability is a highly useful and convenient loan feature that can save you a significant amount of time, stress, and money in very specific situations. For Perth homeowners locked into a competitive fixed rate, it can be an excellent way to avoid hefty break fees while securing their next home.
However, convenience should never come at the expense of a good financial deal. The “set and forget” approach can be costly if it means you are stuck on an uncompetitive interest rate for years to come. The most important step is to assess all your options. A quick phone call could reveal that refinancing, even with a break cost, could save you much more in the long run.
Before you make any decisions about your next move, speak with an experienced Perth mortgage broker. They can perform a full analysis for you, calculating the exact cost of breaking your current loan versus the long-term savings of a new, lower-rate loan from another lender. This expert comparison will provide you with the clarity needed to make a truly informed choice between the convenience of porting and the potential savings of refinancing.
