The Reserve Bank of Australia held the cash rate at 4.35% for a seventh consecutive meeting in March 2025, and the futures market is pricing a cut no earlier than the June quarter. For self‑employed borrowers who financed a property during the cheap‑money years on a low‑doc or alt‑doc loan, that plateau translates into a hard choice: sell the current home and refinance into a new purchase at a rate approaching 6.5% p.a., or attempt to take the existing loan with them. Loan portability—substituting one security property for another without discharging the debt—sounds like the obvious escape. In the full‑documentation world, it often is. In the low‑doc and alt‑doc channels dominated by non‑bank lenders, the path has narrowed considerably since late 2023 because credit manuals have been rewritten, LVR ceilings lowered, and serviceability buffers hardened for income that cannot be verified with two years’ tax returns and payslips.
The Australian Prudential Regulation Authority eased the headline serviceability buffer for standard loans from 3.0 percentage points to 1.0 percentage point above the product rate on 1 October 2024 (APRA letter to ADIs, 8 July 2024). Yet that directive applies only to authorised deposit‑taking institutions and does not bind the non‑banks that underwrite most self‑employed business. Pepper Money, Liberty Financial, Resimac, La Trobe Financial, Bluestone and Brighten each set their own portability rules for borrowers who use BAS statements, accountant‑certified income declarations or business bank account analysis. Those rules have diverged sharply from the prime‑lender playbook, and they change frequently. A sole trader who last checked lender policies in early 2023 will find a very different landscape today.
What Loan Portability Means for the Self‑Employed
Portability is a variation clause inside the loan contract that allows a borrower to remove the original security property and replace it with a new one, typically within a 90‑day bridging period, while the loan contract, loan balance, interest rate and remaining term stay unchanged. No new credit application is created, no discharge fees are charged, and the borrower avoids a fresh stamp‑duty‑on‑mortgage liability in most states. The legal mechanism is a substitution-of-security deed, not a new mortgage.
Substituting Security Without a New Loan Application
A standard portability request involves three parties: the lender, the borrower’s conveyancer and the lender’s panel valuer. The borrower finds a new property, the valuer confirms its market value, and the lender agrees to lift the existing mortgage from property A and place it over property B. If the new property is of equal or higher value and the LVR does not increase, the process often passes without a full credit re‑assessment for a PAYG borrower. The lender simply reconstitutes the security.
Where Low‑Doc Borrowers Get Caught
For a self‑employed borrower, the substitution almost always triggers a re‑assessment of the borrower’s capacity to service the existing loan. Non‑bank lenders treat portability as a “credit event” even when the contract language labels it an administrative variation. That means the borrower must supply fresh income evidence—BAS statements, business account transaction summaries, an accountant’s letter or a trading‑position declaration—and the lender will test it against current policy, not the policy that was in force when the loan settled. A contractor who qualified in 2021 with a declared gross income of $120,000 may find the lender now grosses up bank statement credits by only 80% instead of 100%, thereby cutting assessed income to $96,000 and flipping an acceptable DTI into a decline.
Lender Policy Snapshot: Non‑Bank Portability Rules
The six lenders that dominate the Australian low‑doc market have each taken a different posture on portability. The overview below is based on credit manuals in force as at March 2025 and on public product guides.
Pepper Money
Pepper Money tightened its substitution-of-security rules in November 2023 (Pepper Money Specialist Lending Guide, 14 November 2023). For its Near Prime and Specialist alt‑doc lines, the maximum LVR on a security substitution is now 70% for a full‑alt‑doc application (tax returns plus BAS) and 65% for a BAS‑only or accountant‑letter declaration. The borrower must also remain inside a DTI ceiling of 8.0x, and the lender will assess net income after adding back non‑cash expenses only if the accountant’s letter covers the most recent twelve months. Pepper will not accept a portability request when the loan was originally funded on a bank‑statement program with less than six months of consistent trading credits.
Liberty Financial
Liberty Financial updated its Specialist Lending Guidelines on 12 March 2024 to codify portability for low‑doc loans. A borrower who has held the loan for at least 18 months can apply to substitute securities without incurring a new application fee, provided the LVR does not exceed 75% and the exit property is sold simultaneously. Liberty will re‑assess serviceability using a 1.5‑percentage‑point buffer above the variable rate (compared with APRA’s 1.0‑point buffer for ADI‑regulated prime loans) and will gross up BAS‑declared income by 90% if two years of BAS are available, or 80% for a single year. DTI is capped at 8.5x for self‑employed borrowers using an accountant’s letter. Liberty’s manual also states that if the new security is in a postcode classified as “regional with population under 50,000,” LVR reduces to 65%.
Resimac
Resimac’s Alt‑Doc and Specialist Portability Policy (effective 1 July 2024) treats a portability transaction as a new loan for credit‑assessment purposes. That means the standard alt‑doc LVR ceiling of 80% for metropolitan postcodes applies, and a full serviceability test is run. Resimac uses a floor assessment rate of 7.50% p.a. for low‑doc borrowers regardless of the actual product rate, creating a hard income hurdle. BAS‑declared income is accepted at face value if the borrower can supply 24 months of quarterly BAS, but sole traders must also provide a profit‑and‑loss statement signed by a registered tax agent. The DTI limit sits at 7.5x for loans above $1 million and 7.0x for loans above $1.5 million. A portability fee of $595 is charged, plus the cost of a new valuation ($330–$440 depending on postcode).
La Trobe Financial
La Trobe Financial does not offer a clean portability feature on its low‑doc product set. Its Credit Policy (19 February 2024 update) specifies that a substitution of security is available only for full‑doc borrowers with a clear credit history. For alt‑doc and low‑doc borrowers, La Trobe requires the existing loan to be discharged and a new application lodged, with the borrower passing the full origination scorecard. This makes it functionally impossible to port a loan without re‑underwriting the entire transaction, paying a discharge fee ($950 for loans under $2 million) and potentially resetting to a higher rate. A small‑business owner wanting to move a La Trobe‑funded property will almost always be better served by refinancing to another non‑bank that permits portability rather than staying put.
Bluestone and Brighten
Bluestone’s 2025 Near‑Prime Product Guide (dated 15 January 2025) permits portability on its full‑doc loans up to 80% LVR and on alt‑doc loans up to 70% LVR, with the same serviceability buffer as a new loan: 2.0 percentage points above the customer rate. BAS income is accepted if the borrower has lodged at least four quarterly BAS within the past 18 months. Bluestone will not accept an accountant’s letter on its own for a portability event; it must be accompanied by six months of business bank statements.
Brighten’s Specialist Residential Lending Guidelines (revised 3 February 2025) offer an Expat and Self‑Employed portability pathway. LVR is capped at 75% for accountant‑declared income and 70% for BAS‑only. Brighten requires a minimum 12‑month seasoning period before a portability request can be lodged, and the new property must be of a type consistent with the original credit profile—investor to investor, owner‑occupier to owner‑occupier. A switch from investment to owner‑occupation will trigger a full reassessment and a product swap. The serviceability buffer is 1.25 percentage points above the standard variable rate for loans with an LVR below 70%, and 1.75 percentage points for LVRs between 70% and 75%.
The Serviceability Hurdle: LVR, DTI, and Buffer Arithmetic
Every portability request in the non‑bank low‑doc space revolves around three numbers: the loan‑to‑value ratio of the new security, the debt‑to‑income ratio of the borrower’s declared income, and the serviceability buffer the lender applies to the assessment rate.
APRA’s October 2024 Buffer Reduction and Its Limits
The regulator’s decision to lower the standard serviceability buffer from 3.0 to 1.0 percentage point above the product rate (APRA, 8 July 2024) does not directly constrain non‑bank lenders, which are not ADIs. Nonetheless, it set a market benchmark. Several non‑banks trimmed their buffers in response: Liberty moved from 2.0 to 1.5 points on low‑doc loans, and Pepper cut its alt‑doc buffer from 2.5 to 2.0 points for full‑alt‑doc applicants while leaving BAS‑only unchanged. Brighten and Bluestone stuck with higher buffers, reasoning that self‑employed income streams are more volatile. The practical result is that a self‑employed borrower on a 6.2% p.a. variable rate will be assessed at 7.45% (Liberty), 8.2% (Pepper full‑alt‑doc), or 8.0% (Bluestone) depending on the lender. That $375,000 loan that passed a 7.5‑point floor rate in 2022 may now fail at 8.2% if the assessed income has not kept pace.
How Bank Statement and BAS‑Only Income Is Scaled
Each lender applies an income‑scaling factor to non‑traditional documentation. Pepper grosses up the deposits shown in business bank statements: 80% of total credits for a sole trader with 12 months of transactions, or 85% if the business operates through a company structure with two years of records. Liberty uses a 90% factor on BAS‑declared turnover if two full financial years of BAS are available, deducting GST and adding back depreciation. Resimac takes BAS‑declared gross income at face value but then applies a 30% expense ratio for a sole trader who cannot produce a tax‑agent‑signed P&L. Bluestone uses the net profit figure from an accountant’s letter and adds back interest and depreciation to arrive at a serviceable income figure. All of these adjustments mean a borrower whose declared gross revenue is $180,000 might be assessed with serviceable income ranging from $108,000 (Resimac solo trader with no P&L) to $135,000 (Liberty with two years of BAS and add‑backs). The gap of $27,000 can be the difference between portability approval and a forced refinance.
The DTI ceiling further compresses the available loan amount. Using Brighten’s 70% LVR and 7.0x DTI cap, a borrower with assessable income of $120,000 cannot carry total debt of more than $840,000, including the existing loan, credit cards and any HECS‑HELP liability. If the loan being ported is $600,000, the borrower has only $240,000 of headroom for car loans, credit cards and any top‑up, making the new property purchase sensitive to even small valuation differences.
Structuring the Move: Timing, Documentation, and Contingencies
Moving house with a low‑doc loan requires orchestration of the sale and purchase contracts, valuation timing, and the lender’s credit moment. The standard template used by non‑banks builds a 90‑day bridging window into the substitution deed, and the borrower must have both a signed contract to sell the existing property and a signed contract to purchase the new property before the lender will open the portability file.
The 90‑Day Bridging Window
Most non‑bank portability deeds allow up to 90 days between settlement of the old property’s sale and settlement of the new purchase. During that period, the lender holds the loan in a “substitution pending” state and will not call the loan provided the sale is unconditional and the purchase contract remains in force. Some lenders will extend the window to 120 days if the borrower can demonstrate that delays are caused by factors outside their control—land registration delays, a failed settlement on the new property—but extensions are discretionary. Pepper’s policy explicitly states that the 90‑day window is a contractual maximum, and if the borrower fails to settle the new purchase within that time the lender may demand full repayment. A self‑employed borrower therefore needs a backup refinancing pathway in case the purchase settlement slips beyond the deadline.
Preparing an Alt‑Doc Trail
Because portability almost always triggers a fresh serviceability assessment, the borrower should prepare the same documentation packet that would accompany a new low‑doc application. This means gathering:
- The most recent four quarterly BAS statements lodged with the ATO.
- Twelve months of business bank account statements for the main trading account (six months for some lenders, but 12 months is safer).
- An accountant’s letter on the firm’s letterhead stating the borrower’s net profit before tax, plus add‑backs for depreciation, interest and non‑recurring expenses, for the most recent financial year.
- A signed trading‑position declaration if the business was established less than two years. The borrower should also ask the accountant to include a statement that the business is currently solvent and trading consistently, because several non‑banks now require that wording as a condition of portability.
Nine weeks before the expected settlement of the existing property, the borrower should lodge the portability request with the lender and order a valuation on the new property. If the valuation comes in below the contract price, the borrower has a narrow window either to renegotiate the purchase price or to inject additional equity to keep the LVR within the lender’s cap. Negotiating with a vendor is rarely fast, so the borrower needs contingency funds of at least 10% of the purchase price to cover a shortfall.
Acting Before Portability Options Narrow Further
Non‑bank lenders regularly revise their low‑doc portability policies in response to funding‑line costs and delinquency trends. A self‑employed borrower who intends to move house in 2025 or early 2026 should move quickly on these five items.
First, obtain a copy of the existing loan contract and check the substitution‑of‑security clause. Not all low‑doc contracts guarantee portability; some limit it to “at the lender’s discretion,” which means the lender can refuse without giving detailed reasons. Knowing the wording determines how hard to push.
Second, commission a desktop valuation on the current property. If the sale price will reduce the loan‑to‑value ratio to below the lender’s current policy ceiling for a substitute security, the portability request becomes substantially easier to clear because the credit committee sees a stronger equity position.
Third, order the accountant’s letter and BAS records early. The letter should be dated no more than 30 days before the portability submission, because lenders treat an outdated letter as stale. Many rejections in the 2024 calendar year stemmed from letters older than 90 days (Liberty Financial, broker bulletin, 12 March 2024).
Fourth, if the existing lender prohibits alt‑doc portability—as La Trobe does—obtain pre‑approval from a competing non‑bank that allows a fresh full‑doc or alt‑doc application with portability‑like timing. Bluestone and Brighten both accept simultaneous discharge‑and‑settle deals, and Liberty’s “fast‑refi” process can complete within 28 days if the borrower’s paperwork is ready.
Fifth, stress‑test the DTI. Add the existing loan balance to all other liabilities—credit card limits, car loans, ATO payment plans—and divide by the lender’s assessed income figure, not the borrower’s own estimate. If the ratio exceeds 7.0x, talk to a broker about which lender uses the most generous income‑scaling methodology for the borrower’s specific documentation type. Moving the loan to a lender that grosses up 90% of BAS turnover rather than 80% can add $20,000–$50,000 of assessable income and bring the DTI back within limits.