Can you transfer your home loan to another person? In Australia, the short answer is no—you cannot simply hand your mortgage debt to someone else like a set of keys. Because a home loan is a legal contract tied to your specific financial situation, ‘transferring’ a mortgage actually requires the new owner to apply for a brand new loan to pay out your old one.
Whether you are navigating a divorce, selling to a family member, or managing an inheritance, the process effectively works like a refinance. Speaking with a Mortgage Broker Brisbane can help you avoid mistakes during this complex process.
Here is everything you need to know about the costs, the risks, and how to get lender approval.
Are You Moving Your Loan To A New House Or A New Person?
Many people confuse “loan portability” with “transferring a mortgage.”
These are two completely different banking processes. You need to know which one applies to your situation.
1. Loan Portability (Moving House) This applies when you are moving, but you want to keep your existing loan.
- The Goal: You sell your old home and buy a new one.
- The Benefit: You keep your current loan account number and interest rate.
- The Action: You “port” the loan from Property A to Property B.
If you are moving house, please read our specific guide on Loan Portability.
2. Mortgage Transfer (Changing Borrower) This applies when the property stays the same, but the owner changes.
- The Goal: You want to give the debt (and the house) to someone else.
- The Scenario: You are buying out a partner, gifting to family, or removing a co-borrower.
- The Action: The new owner must apply for a brand new loan.
- Which one do you need? If you want to transfer the debt and title to another person, you are in the right place. Keep reading below for the full process.
Why Would You Transfer A Home Loan?
You won’t transfer a home loan every day. However, specific life events often demand it. Lenders understand that your circumstances change.
They may allow a mortgage transfer under the right conditions. The key is following the correct process. You must always get the lender’s formal approval first.
Common reasons homeowners transfer a mortgage include:
- Divorce or separation: Relationships end. One partner often wants to keep the family home. You must refinance to take over the loan. This releases the other partner from the mortgage and title.
- Inheritance or death: A borrower might pass away. The property goes to a beneficiary. You may choose to keep the home. However, the lender must approve you for the loan.
- Financial hardship: Life happens unexpectedly. Illness or job loss can impact repayments. A partner or relative might step in. The lender assesses their affordability before approving the switch.
- Family transfers: Parents often help kids enter the property market. They might sell or gift a home. You may get a favourable price. But you still need to qualify for the mortgage.
- Business partners separating: You might co-own property for investment. One partner may want to exit. The other buys out their share. This requires refinancing the loan under a single name.
- Changing co-borrowers: You may want to swap a co-borrower. Perhaps an old relationship ended. You can bring in a new partner. This involves a full credit assessment for the new borrower.
The Bottom Line – Most “transfers” are actually a refinance. Your lender pays out the existing loan. They then set up a new loan. The original owner is then released. We explain the exact steps below.
Can You Legally Transfer A Mortgage?
You cannot simply hand your mortgage to someone else. It does not work like a physical title deed.
Australian property laws are strict here. Most loan contracts contain a “due-on-sale clause.” This requires you to repay the full loan if the property changes ownership.
In the past, “assumable mortgages” allowed you to take over debt easily. Today, they are essentially impossible in Australia.
The Golden Rule: Treat It Like a Sale
Lenders treat a transfer just like a property sale. This applies even if you transfer the home to a family member.
The loan does not move automatically. You must notify your lender. You will need to arrange for the loan to be discharged or refinanced.
Lender Approval is Mandatory
You cannot transfer a home loan without bank consent. The new owner must apply for their own loan.
This new loan pays out your existing mortgage. It effectively clears your debt and starts theirs.
Leading industry sources confirm this standard:
- RealEstate.com.au notes that lenders usually require a new application rather than a simple handover.
- Loans.com.au warns that lenders must comply with Responsible Lending legislation. They cannot approve a transfer without a full assessment.
The Risk of Informal Arrangements
Do not try to manage this behind the scenes. A friend might agree to pay your mortgage informally.
However, the legal debt remains yours. The bank holds you responsible until they formally change the borrower.
You must involve the lender to protect yourself. Always go through the formal refinancing or legal transfer process.
Common Transfer Scenarios And Case Studies
Mortgage transfers usually happen during specific life events. We see these scenarios daily at Hunter Galloway.
Below are case studies showing how we handle these transfers.
Scenario 1: Divorce or Separation (The Buyout)
The Situation: John and Jane own a home with a $500,000 mortgage. They separate, and Jane wants to keep the property.
The Process:
- Refinance: Jane must qualify for the loan on her own income. She essentially refinances the property into her sole name.
- The Buyout: John is removed from the title. Jane takes over the full debt.
- Costs: Jane may pay stamp duty on the transfer, though some states offer exemptions for relationship breakdowns.
Expert Insight: Usually, you need a 20% deposit to avoid Lenders Mortgage Insurance (LMI). However, some lenders allow up to 95% LVR without LMI if you have a Family Law Court Order. This can save you thousands during a settlement.
Scenario 2: Parents Gifting to Children (Favourable Purchase)
The Situation: Mary and Tom want to sell their home to their daughter, Emily. The home is worth $600,000, but they only owe $400,000. They “sell” it to her for the loan amount ($400,000).
The Process:
- Favourable Purchase: This is a sale at a discounted price. It avoids real estate agent fees.
- Gift of Equity: The $200,000 difference is a “gift of equity.” Emily can often use this equity as her deposit. She may not need genuine savings.
- The Catch: Stamp duty is calculated on the market value ($600,000), not the sale price ($400,000).
Scenario 3: Inheritance or Death
The Situation: John passes away, leaving a home with a mortgage to his wife.
The Process:
- Notification: The executor or spouse notifies the lender.
- Transfer: The bank typically allows the loan to transfer to the survivor.
- Assessment: Lenders treat this with compassion. However, they must still ensure the survivor can afford the repayments.
Note: Stamp duty is generally not payable when a spouse inherits a Principal Place of Residence (PPR).
Scenario 4: Transfer Between Friends (Transfer of Equity)
The Situation: James and Daniel co-own an investment property. Daniel wants to cash out his share.
The Process:
- The Exit: James must buy Daniel out. He becomes the sole owner.
- Reassessment: James must prove he can service the entire loan on his single income.
- Risk: If James cannot afford the loan alone, he may need a new co-borrower or Guarantor. Otherwise, they must sell the property.
This is technically a “Transfer of Equity.” Ownership structure changes (e.g., from Joint Tenants to Sole Owner), requiring a full credit reassessment.
Scenario 5: Transferring to a Family Trust or Company
The Situation: You want to move your personal home into a Family Trust or Company. This is often done for asset protection or advanced tax planning.
The Process:
- The Sale: It is treated as a sale. You essentially “sell” the property to the Trust or Company entity.
- New Loan: The Trust must apply for the new mortgage. You (the individual) usually act as the Directors’ Guarantor.
- Warning: Some lenders may view this as a commercial transaction. This means loan terms, fees, and interest rates might differ from standard residential loans. Always check with a broker before moving assets into a trust.
The Transfer Process – Step by Step
Transferring a mortgage is a formal legal process. It mimics a standard property purchase.
Here is the typical roadmap you will follow.
Step 1: Speak to a Mortgage Broker
Start here. Do not just call your current bank.
Most lenders require a full refinance to change names. A mortgage broker can compare lenders to find the best deal for the new owner. We also check if you qualify for stamp duty exemptions.
Step 2: The New Application
The person taking over must submit a new loan application.
The lender assesses income, debts, and credit history. They must comply with Responsible Lending laws.
- The Goal: Ensure the new borrower can afford the debt alone.
- The Outcome: Conditional approval for a loan that pays out the old mortgage.
Step 3: Prepare Legal Documents
You cannot do this part yourself. You must engage a solicitor or conveyancer.
They will draft the Transfer of Land document or a Contract of Sale.
Even if you “gift” the property, formal paperwork is mandatory. This ensures the transfer is legally binding and recorded with the State Revenue Office.
Step 4: Valuation and Unconditional Approval
The lender will order a property valuation.
They need to confirm the home’s current market value. This determines your Loan to Value Ratio (LVR).
Once the value and finances are confirmed, the lender issues Unconditional Approval. They then send out the new loan documents for signing.
Step 5: Settlement Day
This is the finish line.
- Discharge: The old mortgage is paid out and closed.
- Registration: The new mortgage is registered on the title.
Title Update: The Land Titles Office updates the official ownership records.
The new owner now has full legal title and financial responsibility.
Two Ways to Structure the Transfer
The process varies slightly depending on your goal.
1. Transfer of Equity (The “Add-On”)
This is common when adding a spouse or removing an ex-partner.
- What it is: You change the names on the title but keep the underlying ownership largely the same.
- The Benefit: You might handle this as a single transaction without a full open-market marketing campaign.
- The Result: You still need a refinance, but the process is often faster.
2. Sale and Purchase (The “Clean Break”)
This is best for fully removing yourself or selling to a third party.
- What it is: You formally “sell” your share to the other person.
- The Price: The sale usually happens at market value or the loan balance amount.
- The Benefit: It triggers a clear settlement process. This cleanly separates all financial ties between the parties.
Costs And Timeline To Transfer A Mortgage
How long does a transfer take? You should prepare for a process similar to a standard refinance.
Industry data suggests most transfers take 4 to 8 weeks from application to settlement.
The lender must verify documents, order valuations, and prepare new loan contracts. If you are also settling a property sale simultaneously, allow extra time for conveyancing.
Your Transfer Timeline
- Weeks 1–3 (Application): We discuss your goals, submit the new application, and gather your payslips.
- Weeks 2–4 (Assessment): The lender orders a property valuation and conducts credit checks. They issue conditional approval.
- Weeks 4–6 (Legals): Your conveyancer prepares the Transfer of Land. Both parties sign the mortgage documents.
- Weeks 6–8 (Settlement): The old loan is discharged. The new loan is registered. The title officially updates.
Note: Simple “spousal transfers” may be faster, while complex divorces can take longer
Who Can Pay Off The Mortgage?
Can someone else pay your mortgage for you?
The Short Answer:
Yes. Anyone can deposit money into your mortgage account. A family member can transfer funds freely.
The Legal Reality:
However, paying the bill does not make them the owner. The bank still holds the original borrower responsible for the debt.
- No Automatic Transfer: Lenders do not recognize informal arrangements.
- Assumable Mortgages: You cannot simply “take over” a loan without applying. This product is effectively obsolete in Australia.
- Legal Liability: Until the bank formally approves a transfer, the debt remains 100% in your name.
A Helpful Alternative:
If a friend or relative wants to manage repayments without taking ownership, you can authorise them. Ask your lender for a Third Party Authority form. This allows them to speak to the bank about the account without becoming the legal borrower.
Major Costs And Fees of Transferring a Home Loan
Transferring a mortgage is not free. It involves several significant one-off costs.
You must budget for these before starting. Here are the key expenses you will fac
1. Stamp Duty (The Big One)
This is usually the largest cost. In Australia, the government charges duty on property transfers.
Crucial Warning: Duty is calculated on the market value, not the sale price.
Even if you sell the home to your son for $1, the government charges duty on the full $600,000 value.
Exceptions for Spouses:
Transfers between spouses often qualify for exemptions. However, gifts to children or friends usually trigger full duty.
Stamp Duty Exemptions for Spousal Transfers
Rules change frequently. Always check with your local State Revenue Office.
State | Relationship Breakdown (Divorce) | Transfer to Spouse (Love & Affection) |
NSW | Exempt (Section 68) | Exempt (If passing family home to partner) |
VIC | Exempt (Section 44) | Exempt (Principal Place of Residence only) |
QLD | Exempt | Exempt (Principal Place of Residence only) |
WA | Nominal Duty ($20) | Exempt (Principal Place of Residence only) |
SA | Exempt | Exempt (Principal Place of Residence only) |
2. Capital Gains Tax (CGT)
Are you transferring an investment property? You may have to pay Capital Gains Tax.
- The Rule: You pay tax on the increase in value.
- The Catch: This applies even if you gift the property. The ATO treats it as a sale at market value.
- The Good News: Transfers of your “Main Residence” are usually exempt from CGT.
3. Loan Break Fees
Do you have a fixed-rate loan? Be careful.
Paying out a fixed loan early often triggers a Break Fee. This can cost thousands of dollars.
- Variable Loans: Usually have low or no exit fees.
- Discharge Fee: Your old bank may charge ~$350 to close the account.
4. Conveyancing and Legal Fees
You need a lawyer to handle the paperwork.
They prepare the transfer documents and lodge them with the Titles Office.
- Cost: Expect to pay between $800 and $2,000.
- Who Pays: Both the “buyer” and “seller” usually pay their own legal costs.
Summary of Costs
Here is a quick breakdown of who pays what.
Fee / Cost | Who Pays? | Notes |
Stamp Duty | New Owner | Calculated on Market Value, not sale price. |
Capital Gains Tax | Seller | Applies to investment properties only. |
Break Costs | Seller | High cost for Fixed Rate loans only. |
Legal Fees | Both Parties | Essential for valid transfer documents. |
Valuation Fee | New Owner | Often covered by the lender, but not always. |
Expert Tip: Always get cost estimates in writing. Ask your conveyancer for a full fee schedule before you sign anything. Don’t forget to update your home insurance immediately after settlement.
Risks and Opportunities For Transferring A Home Loan
Transferring a mortgage is a strategic financial move. Like any strategy, it has pros and cons.
You need to weigh the upfront costs against the long-term benefits
Risks Of Transferring A Mortgage To Another Person
- Unexpected Costs: Stamp duty, CGT, and legal fees add up fast. Ignoring these can break your budget.
- Credit Liability: You remain liable until the bank formally discharges you. If the new owner defaults, the bank may chase you.
- Family Strain: Money mixes poorly with family dynamics. Informal agreements often lead to conflict. Always use written contracts.
- Regulatory Compliance: Shortcuts can be dangerous. Informal side deals can violate lender rules and even look like mortgage fraud.
Can I transfer my low fixed interest rate to someone else?
This is a common question, especially for those on low legacy rates.
- The Reality: Generally, fixed rates cannot be transferred to a new person. Because the loan changes names, the new borrower must apply for a brand new loan at current market rates.
- The Exception: In very rare cases—usually internal spousal transfers—a lender might allow you to retain the rate. However, this is the exception, not the rule.
- The Cost: Breaking a fixed term early usually triggers significant “break costs.”
- Broker Tip: Consult a broker to calculate the math. We can help you see if paying the “break cost” is worth it compared to the cost of a new loan.
The Opportunities Of Mortgage Transfer
- Avoid Agent Fees: A “favourable purchase” cuts out the real estate agent. This saves you 2–3% of the sale price immediately.
- Amicable Divorce Settlements: One partner can retain the family home. This avoids the stress and cost of a public auction.
- A Clean Financial Break: Proper legal transfer frees you from future liability. You can move on without debt hanging over you.
- Loan Restructuring: Use this chance to find a better deal. Switching from joint to sole ownership can improve your borrowing capacity.
- Estate Planning: Gifting property now can simplify inheritance later. It helps your children enter the market sooner.
Expert Advice: Every transfer is unique. Always seek professional advice. Mortgage brokers, lawyers, and accountants can model the specific outcomes for you. Lenders must act reasonably during hardship or separation, but you must still comply with the National Credit Act.
Frequently Asked Questions About Transferring Home Loan To Another Person
Does transferring a mortgage affect my credit score?
Yes. If you are the person taking over the loan, the lender will run a hard credit check on your file. If you are the person being released, the loan should show as “closed” or “paid out” on your report, which may improve your borrowing power for future loans.
Can I transfer my home loan to my wife or husband to save tax?
Yes, this is a common strategy. However, the Australian Tax Office (ATO) scrutinizes transfers done solely for tax avoidance (Part IVA). Always consult a tax professional before transferring property between spouses for tax benefits.
How much does it cost to change names on a mortgage?
Costs vary but typically include a lender discharge fee ($300–$500), a new loan application fee ($0–$600), legal/conveyancing fees ($1,000+), and potentially stamp duty (thousands), unless a spousal exemption applies in your state.
Can I remove a guarantor from my mortgage?
Yes, but you must prove you can service the loan on your own. The lender will re-assess your income and the property value (LVR) to ensure you no longer need the guarantor’s security.
Is it cheaper to do an "Internal Refinance" (same bank) or switch lenders?
An internal refinance is often faster and may save discharge fees, but sticking with the same bank often means paying a “loyalty tax” (higher rate). Switching lenders often unlocks cashback offers and lower variable rates that can offset the transfer costs.
What happens to the mortgage if we divorce but both want to leave?
If neither party wants to keep the home, the property is usually sold on the open market. The proceeds are used to pay out the mortgage entirely, and any remaining funds are split between the parties according to their separation agreement.
Can a pensioner take over a mortgage?
It is difficult. Lenders require proof of “exit strategy” for older borrowers and must ensure the pension income is sufficient to service the loan without hardship. Age restrictions often apply to standard loan terms (e.g., 30 years).
Can I transfer a mortgage if the property value has dropped (negative equity)?
This is very difficult. If the home is worth less than the loan amount, the new borrower cannot refinance the full debt without adding a cash deposit to bridge the gap. Lenders rarely approve transfers where the LVR exceeds 95%.
Conclusion
Transferring your home loan is possible. However, you must follow the formal rules.
Treat this exactly like a standard property transaction.
The Key Takeaways:
- Start Early: Speak to your mortgage broker immediately.
- The Approval: The new borrower must apply and qualify on their own merit.
- The Process: We pay out the old loan and legally transfer the title.
- The Timeline: Expect it to take 6–8 weeks. This matches a standard refinance plus conveyancing.
- The Costs: Always budget for stamp duty and legal fees.
Do not guess the costs. Get clear legal advice before you sign anything.
Next Steps And Transferring Your Property
Are you ready to transfer your home loan to another person but don’t know where to start? Our team at Hunter Galloway is here to help you. Unlike other mortgage brokers who are just one person operations, we have an entire team of experts dedicated to help make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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