Q. My wife and I are planning to move from Nairne in South Australia to Hervey Bay in Queensland this year. We currently have a mortgage with a South Australian credit union.
Would it be easier to refinance our mortgage with a national lender like a bank while we’re still in South Australia? Is an existing mortgage transferred over to the new property or is an entirely new mortgage set up? How would we be placed for a new loan in terms of our income and employment considering we’ll be moving to new jobs?
A. The first question you need to ask your existing home lender is whether or not your mortgage is ‘portable’, that is, whether a new property can be substituted as security for the old one. Many mortgages are portable, so it pays to ask your lender as this avoids the costs associated with refinancing or setting up a new home loan.
Whether it’s a national bank or another state-based lender, costs involved with moving home lenders could include establishment fees on the new loan, legal and valuation costs and stamp duty on the new mortgage. You might also need to pay lenders mortgage insurance (LMI) if you’re borrowing more than 80% of the value of a property. LMI protects the lender if the borrower defaults on mortgage repayments.
Other costs of setting up a new home loan include the costs of getting out of your existing mortgage. You need to check with your lender what these costs are, but they could include mortgage discharge costs. Break or exit fees are extra fees that may be imposed when you exit fixed rate loans.
If you decide to move to a new lender, some insist on a minimum stay in a job or residence before they lend money to you. You need to ask lenders individually about the chances of getting loan approval with both a new job and new residence.
Related: Home Loan Calculator