Transfer Bank Loan? Gain Peace of Mind (2026 Guide)

Transferring a bank loan to another person might seem like a straightforward solution when life circumstances change, but is it really possible? Whether you're dealing with a personal loan, a car loan, or a mortgage, understanding the process and feasibility of transferring a loan is crucial. In this guide, we delve into the nuts and bolts of loan transfers, providing you with the insights needed to make informed decisions.

Understanding Loan Transfers

The concept of transferring a loan involves changing the obligor on the loan agreement, essentially passing the responsibility of repayment to another individual. This can be particularly appealing if you're facing financial difficulties, need to relocate, or undergo a change in personal circumstances. However, not all loans are transferable, and the process can be complex.

In Australia, the transferability of a loan largely depends on the type of loan and the policies of the lender. Personal loans, for example, are typically non-transferable, while mortgages may offer more flexibility under specific conditions. It’s important to note that even when a loan transfer is possible, the new borrower must meet the lender's eligibility criteria, which often includes credit scoring and income verification.

Key Information on Loan Transfers

When considering a loan transfer, several factors need to be taken into account, including current interest rates, lender requirements, and any potential fees involved. As of 2026, interest rates for personal loans in Australia range from 6.49% to 12%, while mortgage rates can vary significantly based on the lender and the borrower’s financial profile.

Here is a comparison of typical loan types and their transferability:

In any case, lenders will require the new borrower to fulfil eligibility criteria, including adequate income, a stable credit history, and a debt-to-income ratio that meets the lender's standards. Additionally, the lender may impose a transfer fee, which can vary but is typically a few hundred dollars.

Steps to Transfer a Loan

If you've determined that a loan transfer is feasible and necessary, follow these steps to ensure a smooth process:

1. Review Your Loan Agreement: Start by examining the terms of your loan agreement to identify any clauses related to transferability.
2. Contact Your Lender: Reach out to your lender to discuss the possibility of a transfer. Be prepared to provide information about the potential new borrower.
3. Eligibility Assessment: The new borrower will need to undergo an eligibility assessment, which includes a credit check and financial evaluation.
4. Submit Required Documentation: Both you and the new borrower will need to submit necessary documentation, such as identification, proof of income, and possibly a co-sign agreement.
5. Approval and Transfer Fee: If the lender approves the transfer, be aware of any applicable fees. Ensure these are agreed upon before finalising the transfer.
6. Finalise the Transfer: Once all conditions are met and fees are paid, the loan can be formally transferred to the new borrower.

Tips and Considerations

Before proceeding with a loan transfer, consider these expert tips to navigate the process effectively:

• Understand the Implications: Transferring a loan can affect your credit score and financial standing. Ensure you fully understand the consequences before proceeding.
• Explore Alternatives: If a transfer isn’t feasible, consider alternatives such as refinancing, debt consolidation, or negotiating new terms with your lender.
• Consult a Professional: Engaging with a mortgage broker, like Esteb and Co, can provide valuable insights and access to a wide range of lenders, increasing the likelihood of finding a suitable solution.
• Communicate Clearly: Maintain open communication with the new borrower to ensure they understand their responsibilities and the terms of the loan.

Frequently Asked Questions

1. Can all types of loans be transferred?
Not all loans are transferable. Personal loans are generally non-transferable, while mortgages may allow transfers under specific conditions.

2. What are the costs associated with transferring a loan?
There may be a transfer fee, which varies by lender but is typically a few hundred dollars. Other costs could include application fees for the new borrower.

3. What happens if the new borrower is not approved?
If the new borrower does not meet the lender's criteria, the transfer cannot proceed. You may need to explore other options, such as refinancing or retaining the loan.

4. Does transferring a loan affect my credit score?
Yes, transferring a loan can impact your credit score, particularly if there are delays or issues with the transfer process.

5. Can I transfer a loan to someone with a lower credit score?
It's unlikely, as the new borrower must meet the lender’s eligibility criteria, which includes having a satisfactory credit score.

6. Can Esteb and Co assist with loan transfers?
Yes, Esteb and Co, with access to 83+ lenders, can provide guidance and support in exploring your loan transfer options and finding the best solution for your circumstances.