Transferring your home to someone else
There are many reasons why you may want to change the ownership of your home. These may include separation or divorce, illness or death, family reasons or a change in financial circumstance.
You cannot transfer your home loan to someone else without lender approval. This is because the lender needs to comply with Responsible Lending legislation and ensure that the loan is not unsuitable for the new person. It is because of this requirement that lenders only agree to transfer home loans in limited circumstances, rather they require a transfer of the property and a new loan to be taken out at the same time as your current loan is paid out.
When considering changing the ownership of your home, it’s important to understand that a change in ownership can incur significant costs in some instances such as capital gains tax, lenders mortgage insurance, stamp duty costs (based on the value of the land and property), discharge and registration fees and legal fees.
Also, generally the person will need to apply for a new loan and provide evidence satisfactory to the lender that they are able to comply with the terms of the new loan without substantial hardship.
Transferring your home loan to another property
If you are buying a new home and you’re particularly happy with your home loan, it is possible to take it with you. This is called loan portability and it means transferring your existing loan to another property without refinancing, which may be possible in cases where your new property meets the requirements set by your lender.
One of the main benefits of loan portability is that it may help you save money on establishment fees and exit fees. However, some lenders may charge you a loan portability fee.
If you do choose to transfer your mortgage, a restriction you will face is that you won’t be able to change the loan structure, including the number of borrowers and the interest rate.
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