How a Home Loan Security Swap Works

A home loan security swap keeps your client’s existing loan open while the lender releases the property being sold and takes a mortgage over the replacement. Lenders also call it loan portability, home loan portability or security substitution. The loan account usually continues with the same rate, repayments and features once the lender approves the new property.

Check the swap before your client exchanges on either property. Westpac asks for the request before the client sells or buys, as at October 2026. If the lender won’t approve the change as a swap, the client needs a new loan instead.

Check Product Eligibility

Check product eligibility by confirming that the current loan has a portability feature and that the client’s loan, borrowers and replacement property fall outside the lender’s exclusions. Loan portability is the lender’s route for security substitution. The lender varies the existing loan so a different property secures it.

St.George says portability isn’t a standard feature at every lender, as at October 2026. Start with the loan contract and the lender’s variations or home lending team. Ask whether the product is portable and what conditions apply to this request.

Portability Is Not a Loan Transfer

Portability moves a loan to a different property, not to a different borrower. ANZ requires the names on the loan to stay exactly the same, as at October 2026. Adding or removing a borrower at ANZ means a new application.

The wording can confuse a client. St.George lists “home loan transfer” among its names for portability, as at October 2026. When a client asks to transfer the loan, confirm whether they mean moving it to a new property or moving it to another person.

Conditions to Confirm Before Relying on Portability

Confirm the borrower, loan, title and replacement-security conditions before the client treats portability as available. The examples below come from Westpac, St.George, ANZ and Macquarie, as at October 2026. Each lender sets its own list, so use them as the questions to put to the current lender.

Condition	What to confirm	Lender examples
Borrowers	The same borrowers stay on the loan and the account isn’t in arrears	ANZ needs identical names. Westpac and St.George exclude loans with a delinquency history and loans taken out by non-residents.
Loan	The product is portable and no increase is pending	Westpac excludes 5% Deposit Scheme loans, Sustainable Upgrades loans and existing bridging loans. St.George excludes construction loans and relocation or bridging loans. Macquarie’s substitute of security is available only on loans with a bank-state-branch (BSB) number starting 182.
Title	Who will own the replacement and whether it’s being bought or already owned	Macquarie accepts a property being purchased or one the client already owns outright, with a copy of the title for an owned property.
Replacement security	The property type and value suit the lender	Westpac and St.George exclude commercial property as the substitute. Both apply a general like-for-like rule.

The lender takes its new mortgage from the registered owner of the replacement. Check that the title will sit in the borrowers’ names before you assume the existing loan can move across.

Value the Replacement

Value the replacement by checking two things: whether the lender accepts the property as security, and the loan-to-value ratio (LVR) once the existing balance sits against the lender’s valuation. Both decide whether the swap goes ahead.

Property Acceptability

Westpac’s general rule is like-for-like substitution with a property of equal or greater value, as at October 2026. St.George applies the same rule and says a downsizing with a reduced loan may still qualify, as at October 2026. Neither accepts commercial property as the replacement.

The lender’s normal security policy still applies to the replacement, including its location, size and title type. The guide to home loan security covers the property types lenders accept when they assess security. Bulma’s Policy Advisor answers security and LVR questions across 52+ lenders and quotes the policy wording behind each answer for your file notes.

Resulting LVR

The LVR is the loan balance as a percentage of the lender’s valuation, not the purchase price. ANZ commonly values the new property and uses the resulting LVR to decide eligibility, as at October 2026. Macquarie’s variations team orders any valuation itself, so you don’t supply one.

As at October 2026, Macquarie requires an LVR of 80% or lower once the substitution is complete. Above 80%, it typically needs a new application and a full discharge of the existing loan. That ceiling is Macquarie’s own, and other lenders set their limits through their own LVR policies.

Worked Example at an 80% Limit

This hypothetical client owes $480,000 at Macquarie and is selling a property for $760,000. The table tests two possible replacements against Macquarie’s 80% limit, as at October 2026.

At Westpac, both replacements would also fail the equal-or-greater-value rule, because each is worth less than the property sold. At St.George, only Property B after the $16,000 repayment reduces the loan, so it’s the only option that may qualify under St.George’s downsizing rule.

Replacement	Lender valuation	Loan balance	Resulting LVR	Within 80%?
Property A	$680,000	$480,000	70.6%	Yes
Property B	$580,000	$480,000	82.8%	No
Property B after a $16,000 repayment	$580,000	$464,000	80.0%	Yes

Property B passes only if the client repays $16,000 from the sale proceeds at settlement. Macquarie says balances can change in a substitution, but the loan limit can’t increase. On a fixed rate, get the lender’s break-cost figure for that repayment before the client commits to Property B.

Coordinate Settlement

Coordinate settlement by getting the swap approved before the settlement date, then lining up the release of the old mortgage, the new mortgage and both settlements on one day. Each party depends on the step before it, so a late valuation or document delays everything after it.

Approval and Discharge Dependencies

Lenders differ on whether they reassess the client before approving a swap. As at October 2026, ANZ and Macquarie make it subject to a credit assessment, while St.George says its portability involves no personal financial checks.

For a substitute of security request, Macquarie asks for these documents:

• The full contract of sale for the replacement, or a copy of the title if the client already owns it.
• The front page of the sale contract, showing the sale price.
• A Home Loan Identification form if the client’s identity was last verified more than two years ago.
• Recent income documents, such as payslips.

Macquarie typically assesses a complete request within 3 business days. It allows 28 days from application to settlement, so lodge the request as soon as both contracts exist.

The old mortgage is released only as part of the approved swap. Westpac’s request form asks you to request that the loan stays open, as at October 2026. St.George’s form asks, “Will the loan be closed?”, and the answer for portability is No.

When Refinancing Is Required Instead

Refinancing is required when the change the client needs falls outside a swap. The client then applies for a new loan and the existing one is discharged at settlement. These triggers come from the four lenders’ pages, as at October 2026.

1. Borrowing more. ANZ and Macquarie require a new application. Westpac and St.George let the client apply for an increase, but it must be approved and finalised before the port.
2. Changing borrowers. ANZ treats adding or removing a borrower as a new application.
3. Changing features. ANZ won’t use a swap when the client wants a loan with different features.
4. An LVR above the lender’s limit. At Macquarie, that means above 80% after the substitution.
5. Settlement dates that can’t align. ANZ needs simultaneous settlement unless it approves holding the sale proceeds in a term deposit.
6. A loan with another lender. Westpac requires the client to refinance to Westpac before portability is available.

For the new application and discharge sequence, use the guide to refinance requirements. If the client buys before selling, Westpac and St.George both arrange a bridging loan, then substitute the new property once the sale settles.

Settlement Steps in Order

Complete these steps in order, because each party needs the result of the step before. The lender details come from Macquarie, NAB, Westpac, St.George and ANZ, as at October 2026. The client keeps paying the loan as normal throughout, as Westpac confirms.

1. Approval. Send the lender the swap request and documents once both contracts exist. Plan the purchase deposit from savings or another source, because NAB notes it can fall due before the sale settles. The step is done when the lender confirms it is assessing a swap.
2. Valuation. The lender values the replacement and calculates the resulting LVR. Formal approval follows once the valuation and credit assessment pass, so check the approval names the swap and the expected balance.
3. Discharge. The lender prepares the release of the old property’s mortgage for settlement without closing the loan. Your client’s conveyancer confirms the release will be ready for the sale settlement.
4. Mortgage. The client signs the variation acceptance and the new mortgage over the replacement. At Macquarie, the variation goes through DocuSign and the original mortgage is wet signed and sent to its solicitor.
5. Simultaneous settlement. The conveyancer books the sale and purchase to settle on the same day. NAB explains that electronic settlements can use linked PEXA workspaces, so funds move from one settlement to the other.
6. Contingency. If the purchase slips after the sale settles, ask the lender to hold the sale proceeds in a term deposit as temporary security. Westpac and St.George allow up to 6 months, and St.George limits it to 3 months when the loan carries lenders mortgage insurance (LMI).

ANZ approves a term deposit case by case, and Macquarie’s swap requires both settlements on the same day. Arrange the fallback before settlement day, because a delay on one side can delay the other.

Confirm the Result

Confirm the result after settlement by checking four records against the formal approval: the sold property’s title, the replacement’s title, the loan account and the settlement statement. Ask the conveyancer for each record if it doesn’t arrive in the settlement report.

1. Old security released. A title search on the sold property shows the lender’s mortgage discharged and the buyer registered as owner. The guide to discharging a mortgage covers that release.
2. New mortgage registered. A title search on the replacement shows the client as registered owner and the lender’s mortgage registered over it.
3. Loan terms. The loan statement shows the same account number, which Macquarie keeps after a substitution, as at October 2026. Check the rate, any fixed rate expiry, balance, limit, repayment and linked offset account match the approval, including any approved repayment.
4. Settlement completed. The settlement statement shows both settlements completed on the expected date and the sale proceeds paid as planned. If a term deposit held the proceeds, check the lender closed it once the replacement became the security.

When all four records match the approval, the swap is complete and the client still holds the loan they started with. File the title searches, formal approval and first statement together. If any record differs, raise it with the lender’s variations team before the next repayment falls due.