New home, same loan – the security swap option

Selling your home and buying a new home? If you’re happy with your existing home loan, you could save yourself having to apply for a new one by making a security swap.

What are the benefits of a security swap?

A security swap (also known as substitution of security or loan portability) is when you keep your original home loan and simply ‘swap’ the property being used as security for the loan – from your old to your new home.

There are a number of reasons why you may want to consider making a security swap.

Keeping it simple

One of the biggest attractions of a security swap is convenience. While a security swap is subject to credit assessment, it’s generally a more simplified process as compared to a new home loan application, which could save you time and effort.

No break costs

If you have a fixed rate home loan and switch to another loan before the end of the fixed term you may have to pay a break cost (also known as an ‘early repayment cost’). Swapping security instead could help you avoid these break fees and keep the same fixed rate.

The loan still meets your needs

Sometimes our situation can change temporarily – perhaps you’re having a baby, working part-time, or transitioning to retirement. If you’re comfortably making your repayments, you may prefer to keep your existing loan knowing it works for you.

Am I eligible for a security swap?

Here’s what you need to consider when requesting a security swap at ANZ:

The timing

To be eligible for a security swap, you generally need to arrange simultaneous settlements. This means that the sale and purchase of your two properties happen on the same date. However, if your current property sale will settle before the new property, you may still be able to use a security swap by applying to have your sale proceeds held in an ANZ Term Deposit as temporary security (dependent on approval).

The same or less borrowing amount

The amount you’re borrowing must be either the same as that borrowed on your existing home loan, or of a lesser amount. If you need to borrow more money to get your new home, a security swap isn’t the answer – you’ll need to apply for a new loan.

Name game

Names on the loan have to remain exactly the same as those on your existing home loan. If you want to add someone or remove someone from the loan, it’s time to start afresh.

Deposit time

With a security swap, you will still need to pay a deposit on the new property. This can be paid using cash from your savings, your redraw facility, an early release from the sale property, equity from your sale and purchase property, or by a Deposit Bond.

The right value

A valuation of the new property will commonly be carried out to determine your Loan to Value Ratio (LVR). In short, LVR is the amount you need to borrow as a percentage of the property’s 'lender-assessed value'. Your LVR will be used to determine if you’re eligible for a security swap.

For more information on the criteria needed to apply for a security swap, contact your lender or an ANZ Home Loan Specialist.

Your guide to security swaps

Check out ANZ's guide to security swaps to learn more and find out if it's right for you.

Download guide (PDF)

When won’t a security swap work?

There are instances when a security swap isn’t possible, and a new home loan may be better suited. This may differ among lenders but at ANZ, a security swap won’t work when:

Upsizing – if you are buying a property of greater value and wish to increase your loan.

Longer settlement – if you can’t arrange a simultaneous settlement and your sale proceeds cannot be held as security in a term deposit.

Behind on payments – if you are behind in your payments and your mortgage is in arrears.

Home loan features – if you want a loan with different features to the one you already have.

Check with your lender or an ANZ Home Loan Specialist to see if you’re eligible to make a security swap. If not, they can help find you a new home loan that best suits your circumstances so you can buy with ease.

Are there fees?

When making a security swap there are certain fees to take into account including the normal mortgage registration fees (unless ANZ already holds the title for the new property). Your lender or an ANZ Home Loan Specialist can provide further information as to the applicable fees. Remember also to factor in the usual house moving costs such as conveyancing, removalists and stamp duty.

What’s next?

A security swap could be quicker to arrange than a new home loan, but it is important to be organised. Contact your lender or an ANZ Home Loan Specialist when you are first thinking about buying to see if this could be an option for you.