Loan Transfer – Gain Control When Banks Say No (2026)

Are you considering transferring a loan to someone else but unsure of the process and its implications? Whether you're looking to offload a financial burden or help a family member, transferring a loan can be a complex decision. Understanding the intricacies involved can save you time and money, and help you make informed choices. Here's what you need to know.

Understanding Loan Transfers

Transferring a loan from one person to another is often referred to as a loan assumption or novation. This process involves transferring both the responsibility and ownership of a loan from one borrower to another. It's not as simple as handing over the keys; the new borrower must meet the lender's eligibility criteria to ensure they can manage the debt.

In Australia, loan transfers are not as common as in other countries, primarily due to the stringent criteria set by lenders. However, they can be a viable solution in scenarios such as divorce settlements, family loans, or when selling a property with an attached mortgage.

Key Information About Loan Transfers

Before proceeding with a loan transfer, it's crucial to understand the rates, requirements, and options available.

Interest Rates: When transferring a loan, the new borrower's interest rate will typically be based on their creditworthiness and current market conditions. As of 2026, interest rates in Australia for personal loans range from 6.49% to 12%, depending on the lender and the applicant's financial profile.

Requirements: The new borrower must meet specific criteria, which usually includes a stable income, a satisfactory credit score, and the ability to repay the loan. Lenders will also require documentation such as identification, proof of income, and possibly an asset statement.

It's worth noting that not all loans are eligible for transfer. For example, personal loans without collateral and certain secured loans may not be easily transferable.

Steps to Transfer a Loan

Transferring a loan requires careful planning and execution. Here's a step-by-step guide to help you through the process:

1. Review the Loan Agreement: Check if the loan agreement allows for transfer or assumption. Some agreements have clauses that explicitly prohibit such transfers.
2. Contact the Lender: Reach out to the lender to discuss the possibility of a loan transfer and understand their specific requirements and conditions.
3. Prepare Documentation: Gather necessary documents, such as identification, proof of income, and any required financial statements for the new borrower.
4. Submit an Application: The new borrower must apply to the lender to assume the loan. This application will undergo a credit assessment to ensure their eligibility.
5. Await Approval: If approved, the lender will transfer the loan to the new borrower's name. Ensure all legal documentation is updated to reflect this change.
6. Finalise the Transfer: Once the transfer is complete, ensure both parties are clear about their new financial responsibilities.

Tips and Considerations

Here are some expert tips to consider when transferring a loan:

• Negotiate Fees: Be aware of any transfer fees and negotiate them with your lender. Some lenders may waive fees for eligible borrowers.
• Impact on Credit Score: Remember, transferring a loan can impact both the original and new borrower's credit scores. Ensure all parties understand these implications.
• Seek Professional Advice: Consult with a financial advisor or a mortgage broker from Esteb and Co, who can provide guidance tailored to your situation and access a panel of 83+ lenders for the best options.
• Consider Alternatives: If a loan transfer is not feasible, explore alternatives such as refinancing or consolidating debt.

Frequently Asked Questions

• Can any loan be transferred to another person?
  Not all loans can be transferred. Personal loans without collateral and some secured loans may have restrictions.
• What happens to the original borrower after a loan is transferred?
  Once the loan is transferred, the original borrower is typically released from the financial responsibility of the loan.
• How long does the loan transfer process take?
  The duration varies, but it generally takes a few weeks to a month, depending on the lender's processes.
• Is there a cost associated with transferring a loan?
  Yes, there may be fees involved, such as processing fees or administrative charges. These can vary by lender.
• Can a loan transfer be reversed?
  Once a loan transfer is completed, it is usually considered final. Reversal would require reapplication and approval by the lender.
• Is a credit check required for the new borrower?
  Yes, lenders typically perform a credit assessment on the new borrower to ensure they meet the eligibility criteria.