Can you transfer your home loan to someone else in Australia? Buying a home is a major commitment, and circumstances can change. For example, you might want a family member to take over the mortgage, or a spouse to retain the home after divorce, or help a friend get onto the property ladder.
However, you cannot just hand your mortgage over to someone else. The process has important legal, financial and tax implications – from stamp duty and capital gains tax to break costs and conveyancing fees. Speaking with a mortgage broker Brisbane can help you understand your options and avoid costly mistakes.
In this comprehensive guide, we explain exactly how to transfer a home loan in Australia, how long it takes, whether someone else can pay off or assume your mortgage, and common situations like divorce, gifting or inheritance.
Let’s dive in…
Why Would You Transfer A Home Loan?
Home loan transfers don’t happen every day, but they do come up in specific life situations. Lenders understand that circumstances change, and in the right conditions, they may allow a mortgage to move to someone else. The key is following the correct process—and making sure the lender signs off on it.
Common reasons people transfer a mortgage include:
Divorce or separation (one partner buys out the other) – When couples separate, one person often wants to keep the family home. In this case, they’ll need to refinance and take over the loan, while the other partner is released from the mortgage and title.
Inheritance or death of a borrower – If a borrower passes away, the property may go to a family member or beneficiary. That person may choose to keep the home and take on the mortgage—subject to the lender approving them for the loan.
Illness or financial hardship – Life happens. If a borrower can’t keep up with repayments due to illness or financial strain, a relative or partner might step in and take over the mortgage. The lender will need to reassess affordability before approving the change.
Family help (like parents gifting or selling a property to their children) – Parents often want to help their kids get into the property market by selling or gifting a home. If you’re buying from family at a favourable price, you’ll still need to qualify for your own mortgage.
Business partners going separate ways – If you and a business partner own a property together and one of you wants out, the other can buy out their share. That means refinancing the loan under one name and removing the outgoing partner from the title.
Replacing a co-borrower (like bringing in a new partner) – Sometimes people want to remove an old co-borrower and add a new one—like when a relationship ends and a new one begins. This usually involves a full refinance, and the lender will assess both parties’ income, credit, and debt levels.
In most cases, a mortgage transfer really means, the existing loan gets paid out, a new loan gets set up and the original owner is released. We will cover the step by step process in more detail in the section below.
Can You Legally Transfer The Mortgage?
Under Australian law, you cannot just hand a mortgage to someone else like a title deed. Most home loans contain a “due-on-sale clause”. This clause says the full loan must be repaid if the property is sold or changes ownership. All modern home loans have these clauses, which means an “assumable mortgage” (taking over the debt without a new application) is essentially impossible. In practice, if the borrower changes, the lender treats it as if the property is being sold. Even if you are transferring property to a family member, the loan does not automatically move. You must notify the lender and arrange for the loan to be discharged (paid out) or refinanced.
Put simply: Lender approval is mandatory. You cannot transfer a home loan without the bank’s consent. The new person wishing to take over must apply for a loan (typically in their own name) that pays out the existing mortgage. For example, RealEstate.com.au explains: “you can’t take over someone else’s mortgage unless the lender approves it first… rather than simply taking over a mortgage, a lender will usually ask you to apply for a new home loan that pays the existing home loan out.”. Likewise, loans.com.au warns that “you cannot transfer a home loan to another person without the lender’s approval as they must comply with Responsible Lending legislation”.
If someone tries to simply pay your mortgage behind the scenes (for instance, a friend sending you money), the legal debt obligation remains with you until the bank formally changes the borrower. The lender will not change who owes the money unless the formal process is completed. In short, you must involve the lender and go through either refinancing or a loan/ownership transfer with legal documentation.
Common Transfer Scenarios and Case Studies
There are a few situations where mortgage transfers come up. Below are case-study examples illustrating how transfers are handled:
Scenario 1: Divorce or Separation
John and Jane own a home together with a $500,000 mortgage. They divorce, and Jane wants to keep the house. Jane must qualify on her own income for a new loan, and she essentially refinances the property in her name. John is ‘bought out’. The lender must approve Jane’s loan application. Legally, this looks like a sale/purchase of John’s share to Jane, plus paying out John’s interest in the loan. Jane will pay stamp duty on the (deemed) transfer of the property to her name if required, and if the property was their shared home (jointly owned) there may be no capital gains. John’s name is removed from title and mortgage at settlement, and Jane’s new loan is registered. This process can take several weeks to a few months, as outlined below.
Scenario 2: Gifting/Family Transfer
Mary and Tom want to transfer their home to their daughter Emily. The mortgage balance is $400,000.
- Option 1 (Favourable Sale): They “sell” the house to Emily at the outstanding loan value ($400k). Emily then applies for a $400k mortgage to pay out Mary and Tom’s loan. Mary and Tom effectively gift the $100k equity as a kind of discount. Stamp duty applies on the market value in most states (though some states or exemptions may reduce or waive duty for family transfers). Because Mary and Tom have lived there, they likely have no capital gain on a gift of their PPR (principal place of residence). Emily becomes legal owner and new mortgagee after settlement.
- Option 2 (Adding to Title): Alternatively, they could add Emily to the title (transfer of equity) without removing themselves, but the loan still stays under both their names unless refinanced. Most families do a nominal sale at loan value as in Option 1. This scenario is often called a “favourable purchase” because the sale price equals the loan (avoiding agent fees). Mary and Tom must notify the bank and pay off their loan from Emily’s new loan. Legal fees and duties apply, but the family avoids an open-market sale.
Scenario 3: Inheritance or Death
John dies with a $300,000 mortgage on a family home he left to his wife. The executor or spouse must notify the bank. Depending on the will or trust, the remaining owner (spouse) may choose to take over the property. The bank typically allows the loan to be transferred onto the survivor’s name, possibly with a reassessment of their income. They may still need to refinance if necessary. Many lenders treat a death in the family as a special case and assist in transferring ownership through probate. The key point is the surviving owner usually pays out the deceased’s interest and continues with the loan. Stamp duty is generally not an issue for transfers on death (most states exempt spouses inheriting PPR).
Scenario 4: Transfer of Equity Between Friends
Two friends, James and Daniel, co-borrowed and co-owned an investment property a few years ago. Now, Daniel wants to exit the arrangement and cash out his share. To do this, James needs to buy Daniel out. This process works just like a sale—James becomes the sole owner, and Daniel is removed from both the loan and the title. James must apply for a new loan in his name alone, and the lender will reassess his financial position to ensure he can afford the repayments on his own.
If James doesn’t qualify for the loan on his own, he may need to bring in a new co-borrower—like a partner, family member, or investor—or they’ll both need to consider selling the property altogether. Importantly, the lender must approve any borrower changes. Removing Daniel from the mortgage isn’t automatic—it requires a full reassessment and legal updates. Mortgage brokers often refer to this type of restructure as a “transfer of equity”, where ownership of the property doesn’t change hands entirely, but the names on the title and loan do.
Scenario 5: Family Gifting
Mark and Linda, a married couple, decide to sell their home to their daughter, Emily, at the remaining mortgage balance—effectively gifting her the equity they’ve built up. Emily uses the funds she has (or saves) as a deposit and applies for a new loan to cover the full $400,000.
The lender treats this like any standard purchase: Emily’s income is assessed, and the loan is granted in her name (or in both her and her parents’ names, if structured that way). Stamp duty is charged on the market value by most states, and a conveyancer prepares the necessary legal documents, including the transfer and deed.
In this way, the mortgage “moves” from Mark and Linda to Emily in a transparent, legal manner. (Note: Some states offer stamp duty exemptions for transfers between spouses or partners, but gifting to children usually triggers duty on the market price.)
The Transfer Process – Step by Step
Step 1: Talk to the Lender or Broker
Inform your bank (or lender) of your plans. They will explain what approvals are needed and what products might apply. This is often the first and most important step because the lender must agree to the transfer. In most cases, the lender will not allow a name change on the loan without a full refinance process. Mortgage brokers can also help compare products and advise on the best course of action.
Step 2: Apply for a New Loan (Refinance or Transfer)
The person taking over (new borrower) submits a loan application, including income, assets, debts, credit history, etc. The lender conducts a responsible lending assessment, just as it would for any new loan. This ensures the new borrower can afford the loan and meets the lender’s criteria. If approved, the new loan amount is structured to pay out the existing loan balance. The original borrower is then released from their financial obligations.
Step 3: Prepare Legal Documents
A solicitor or conveyancer drafts the necessary sale/purchase contract or transfer of equity paperwork. Even if the “sale price” is only the loan amount, formal legal documentation is required. These documents ensure that the transfer is legally binding and compliant with local property laws. Stamp duty or other transfer-related costs may also apply, depending on the jurisdiction. Both parties must sign and agree to the terms of the transfer.
Step 4: Property Valuation and Approvals
The lender may require a formal property valuation to confirm the current market value of the home. This helps the lender assess risk and determine the final loan amount. Any additional conditions, such as a deposit or a guarantor, must also be satisfied before proceeding. These steps help protect both the lender and the borrower. Once approved, the new loan funds will be ready for settlement.
Step 5: Settlement (Transfer of Title and Loan)
On settlement day, the original mortgage is discharged (cancelled) and a new mortgage is registered in the new borrower’s name. This finalizes the loan transfer and legally changes ownership of the property. The Titles Office updates the land title registry to reflect the new owner. The settlement agent coordinates all parties to ensure funds are transferred and documents are filed correctly. Once completed, the new borrower takes full ownership and financial responsibility for the home.
This steep by step process is a simplified outline. The exact path can vary:
- Transfer of Equity: If you are merely adding/removing a name on title but keeping the property ownership largely the same, it’s called a transfer of equity. You must still get lender approval and often refinance, but you might handle it as a single conveyancing transaction without formally selling on the open market. For example, adding a spouse or child to the title (and loan) can be done via transfer of equity.
- Sale and Purchase: If you want to fully remove yourself from the property or add a third party, the cleanest way is often to “sell” your share to the other person. This sale is usually at market or loan value, followed by the buyer (or transferee) obtaining their own loan. This triggers the most straightforward settlement process, treating it just like any other property sale. All the normal costs (stamp duty, CGT, agent fees) apply unless you structure it carefully (e.g. private sale to avoid agents).
Costs and Timeline
Be prepared for the whole process to take a few weeks to a few months depending on the complexity and how fast approvals come through. Expect the mortgage transfer process to be similar in time to a refinance plus any property sale. According to Australian finance experts, “the entire refinancing process typically takes 6–8 weeks from application to completion”. During this time, the lender will be verifying documents, ordering valuations, and preparing the loan. If you have simultaneous property settlements allow extra time for both sale and purchase contracts to go through. A realistic timeframe is 1–3 months in total, though simple add-a-name transfers might be quicker.
Here is a rough timeline outline:
- Week 1–3: Discuss with lender, submit new loan application, gather documents.
- Week 2–4: Property valuation, credit checks, and loan approval from the lender.
- Week 4–6: Conveyancer prepares sale/transfer documents; both parties sign contracts.
- Week 6–8: Settlement day – old loan discharged, new loan registered, title updated.
- Week 8+: If needed, any post-settlement tasks (e.g. LMI refunds if changed, notifying insurers).
Who can pay off the mortgage?
Legally, anyone can pay money towards your mortgage account, for example, a family member can give you money and you forward it to the bank. However, that does not change the legal borrower on the loan. The bank still recognizes the person originally on the loan as responsible for the debt until an official transfer. If someone else (like a friend or relative) wants to fully take over the mortgage, the lender will insist that they qualify and come on title. In other words, the other person usually must apply to buy out the loan. That person’s income and credit are assessed to ensure they can maintain the repayments.
There is no magical way for a third party to assume the loan without application. As noted, an “assumable mortgage” is practically obsolete. If someone is simply making your loan repayments, they are effectively gifting or loaning you money – but it’s not considered a loan transfer by the bank. The only “grace” here is that as long as the mortgage stays paid, the lender usually won’t intervene. But if you want your name off the loan contract, the bank requires a formal refinance or transfer.
Major Costs and Fees Of Transferring A Home Loan
Transferring a mortgage usually involves several one-off costs. These can be significant, so plan for them. Key costs include:
Stamp Duty (Transfer Duty): In Australia, stamp duty is charged on most property transfers. Importantly, it is usually calculated on the market value of the property, not on the nominal sale price. This means even if you “sell” the house to a family member for only $1 or equal to the loan balance, the government will likely assess duty on the true market value. There are limited exemptions (for example, spouse transfers in some states), but gifts or low-price sales typically still trigger duty. The new owner is usually responsible for paying this duty. Some jurisdictions have specific concessions for family or principal places of residence transfers, so check your state revenue rules.
Capital Gains Tax (CGT): If the property isn’t your primary residence, giving it to someone else can incur CGT. For example, selling or gifting an investment property to another person means the original owner may pay CGT on any increase in value. If it was your main home, usually no CGT applies. A tax adviser or accountant should be consulted if CGT might be an issue. Even if the property is transferred as a gift, the Australian Tax Office treats it as a disposal at market value, so CGT is still assessed.
Loan Break Fees or Discharge Fees: If you have a fixed-rate home loan, paying it out early can incur a break fee (interest adjustment) as set out in your loan contract. Most lenders have abolished simple “exit” fees for standard variable loans, but fixed loans often have a cost for early termination. The new loan may also have an application fee, and the old lender might charge a discharge processing fee (often a few hundred dollars). These should be factored into your budget.
Conveyancing and Legal Fees: You will likely need a lawyer or conveyancer to handle the property transfer paperwork. Both “buyer” and “seller” usually pay their own legal costs. The conveyancer prepares the transfer documents, pays duty on your behalf, and lodges everything with the land titles office. These fees can range from ~$800 to $2,000+ depending on complexity and state.
Valuation Fees: The lender may require a valuation to confirm the property’s value, especially if you are adding extra borrowing. This cost (often a few hundred dollars) is usually paid by the borrower requesting the new loan.
Below is a table summarizing these costs:
Fee / Cost | Who Pays? | Notes |
Stamp Duty | New owner (usually) | Charged by the state based on market value. Even a “gift” sale triggers it in most states. |
Capital Gains Tax | Transferor (seller) | Applies if property not your main home. Calculated on gain from original cost to market value. |
Mortgage Break Fee | Borrower (seller) | Fixed-rate loans may incur an early payout penalty or interest adjustment. |
Conveyancing / Legal Fees | Buyer and Seller | Each pays their own solicitor’s costs. Essential for preparing transfer-of-title documents. |
Valuation Fee | New borrower (buyer) | Paid if lender orders a property valuation. Covers cost of a professional valuer’s report. |
Lender Fees | New borrower (buyer) | May include loan application fees for the new loan and discharge fee for the old loan (often modest). |
Each situation is unique. The new owner usually shoulders most of these costs (stamp duty, new loan fees, legal costs), because they are effectively buying the property. The former owner may have to pay break/discharge fees. It’s wise to get cost estimates in writing – mortgage brokers and conveyancers can provide fee schedules. Remember also to update or obtain new insurance and notify relevant parties (e.g. local council for rates, utilities, your tax adviser).
Risks and Opportunities For Transferring A Home Loan
Like any financial move, transferring a mortgage has pros and cons:
Mortgage Transfer Risks
- Unexpected Costs: Stamp duty, CGT, break fees and legal costs can add up (see table above). Neglecting these costs can break your budget.
- Interest Rate Changes: If the new borrower refinances, they might get a different (often higher) rate than the original loan, raising repayments.
- Credit/Legal Risk: If things aren’t done properly, the original borrower could remain liable. For example, if the buyer defaults after you have left title, the bank might still pursue the original borrower unless the mortgage was correctly discharged.
- Family Strain: Money is personal. Transferring property within a family (or with an ex) can cause conflict if expectations aren’t clear. Written agreements are essential.
- Regulatory Compliance: Lenders have strict rules. Trying shortcuts (like informal side deals) could lead to trouble, including allegations of mortgage fraud.
Opportunities
- Helping Family or Ex: You can keep a home in the family or get it out of a divorce amicably. For example, one spouse can retain the house without forcing a sale on the open market.
- Avoiding Agents: A “favourable purchase” allows you to avoid real estate agent fees, saving 2–3% of the sale price.
- Loan Restructure: This can be a chance to restructure the loan. For instance, switching a joint loan to a single name (or vice versa) can improve borrowing capacity or even reduce interest rates if timed right.
- Early Exit for One Party: If you’re exiting a partnership, completing a proper transfer legally frees you from future liability.
- Tax and Estate Planning: Gifting property to children (with a formal arrangement) can be part of estate planning. Remember, you may get to leave your home to children with potentially less emotional stress if handled transparently.
Every situation is unique. Always seek professional advice. Mortgage brokers, lawyers and accountants can help model the outcomes. The Australian Financial Complaints Authority (AFCA) often reminds lenders to consider special circumstances (like death or separation) reasonably. But ultimately, any transfer must comply with National Credit Act obligations.
Conclusion
Transferring your Australian home loan to another person is possible, but it requires following formal procedures. The key takeaway is: talk to your lender early and treat it like any major property transaction. The person taking over the loan must apply and be approved; the old loan must be paid out or refinanced; and the property title must be legally transferred. Expect a process similar to refinancing your mortgage (on the order of 6–8 weeks) plus the usual legal conveyancing. Plan for stamp duty and other costs, and get clear legal advice.
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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