Can Fixed Loans be Portable

[MikeR]

Can a fixed loan be portable to a new property without incurring the usual fixed loan break fees (economic costs) ?

Assuming the fixed loan amount remains the same from one property to the next of course - ie no change to any of the loan terms other than the security.

Is this something all lenders do ? Or most ? Or some ? or None ?


Or is changing the security fundamentally a break of the fixed loan ?

 

[Aaron_C]

You change security, you are changing the loan because there will be a discharge of mortgage.

 

[MikeR]

And so that is a break of the Fixed Loan and therefore you are up for the break fees ?

 

[Aaron_C]

Yes. Portability is for all intents and purposes just BS. If you change security you need to apply for a new loan.

 

[MikeR]

I appreciate no loan (including a variable loan) is ever "truly" portable - it is always a new loan / new mortgage, but I thought the point of "portability" was to allow that changeover to the new property/new loan to be fairly straight forward without requiring the usual application / approval processes and most importantly, without the usual costs.

My question is does "portability" in that sense apply to fixed loans - ie can the break costs be avoided when the only difference between the old loan and new loan will be the security (fixed term, loan amount etc all stay the same) ?


I am thinking about fixing part of my loan, but can also forsee we may wish to sell within the next 3 years.

I don't want to fix if it means I could be stuck with break costs if we did decide to sell, even if we end up with the same loan amount.

 

[Rolf Latham]

Hiya

Assume for a moment you have a 200 k fixed loan on a place worth 300 k, and you do a port of security to another place with 300 k.................or more

in general, with most lenders this wont be a problem,

If u use a NON bank, you will need a back to back settlement ( ie same day), most banks can take proceeds of sale and provide a term deposit security.

ta
rolf

 

[Bigtone]

Can a fixed loan be portable to a new property without incurring the usual fixed loan break fees (economic costs) ?

Assuming the fixed loan amount remains the same from one property to the next of course - ie no change to any of the loan terms other than the security.

Is this something all lenders do ? Or most ? Or some ? or None ?


Or is changing the security fundamentally a break of the fixed loan ?

yeah u can do it.

i know a few people who basically flip houses full time and b4 they quit work set up 10+ loans which they simply port from property to property so they dont need to apply for new finance, vendor finance people do it as well. Often with fixed loans.

 

[Nathan]

Pending on the lender this is possible.

 

[Terryw]

It could be done by the bank substituting the security.

 

[Cloudedhouse]

Substitution of security is a possibility with most lenders. It's in there interest to keep your loan longer term.

However it is an application process. Requiring property valuations and LMI insurer approval. This is the point where is can get tricky.

The LMI insurer can in some instance impose restrictions or prevent it.

 

[Peter_Tersteeg]

We have successfully ported fixed loans from one property to another on several occassions. The most recent one was a 2 months ago. It's not a big deal, the hardest part is lining up settlements. If there's a gap there are plenty of ways around it if the funds aren't securetised.

 

[RumpledElf]

We substituted security last year with CBA. Took them 6 weeks because they had to value. Was a $300 fee (plus $8k to uncross of course because they valued at keeping loans crossed).

Very glad we have no loans with them anymore.

 

[Cash Flows]

Bump

Bumping this thread.

What if you port a property that requires further funds to be borrowed?

i.e - current prop $250k, looking to purchase $300k prop

Cheers

 

[Rolf Latham]

Bumping this thread.

What if you port a property that requires further funds to be borrowed?

i.e - current prop $250k, looking to purchase $300k prop

Cheers

If the lenders serviceability model allows you to borrow the extra this is usually
Possible.

Can be an issue with some lmi providers

Ta

Rolf

 

[Cash Flows]

If the lenders serviceability model allows you to borrow the extra this is usually
Possible.

Can be an issue with some lmi providers

Ta

Rolf

Thanks Rolf,

I bought the IP for $207k should get $240k plus for it. ($190k loan)

Now looking to get PPOR for $300k with 20% down payment.

Any other issues,roadblocks i need to be aware of?

Cheers

Cash Flows

 

[Rolf Latham]

who be the lender ?

ta

rolf

 

[Cash Flows]

The loan is with ANZ - Breakfree package