Mortgage buyout vs balance transfer: what's the difference?

Reviewed by Kaushal Jha · Published 7 November 2026 · 5 min read

Both transactions pay off an existing mortgage, which is why they're often confused. The difference is who owns the property at the end.

Mortgage buyout: buying a mortgaged property

In a buyout, you're buying a property from a seller who still owes money on it. Your bank pays off the seller's loan as part of the purchase, the seller's bank releases its mortgage, and the property transfers to you with your new mortgage registered.

1. You get pre-approval so the bank is ready.
2. The seller asks their bank for a liability letter showing the exact amount to settle.
3. Your bank values the property and issues the final offer.
4. Your bank, and your own funds as agreed, settle the seller's loan.
5. At the trustee office the old mortgage is released, the property transfers to you, and your mortgage is registered.

Balance transfer: moving your own mortgage

In a balance transfer, you already own the property and you move your loan to a new bank, usually for better terms. Ownership doesn't change.

1. We compare your current terms with new offers, after switching costs.
2. You apply to the new bank and it values the property.
3. Your current bank issues a liability letter.
4. The new bank settles the old loan.
5. The old mortgage is released and the new one registered.

Costs and your rights

Central Bank rules cap what a bank can charge when you settle early or refinance with another bank, and say there should be no barrier to refinancing elsewhere. The new bank's own processing, valuation and registration costs still apply, so we always calculate the net saving. Our refinance calculator gives a first estimate.

Timing is everything

Liability letters are valid for a short period, and both transactions need the banks, developer and trustee office to line up. Most delays come from timing rather than approval. That's where a broker helps most.

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