selling home

There are times when we are at a stage where we are ready for something new or a change of pace in life. However, there are times when these feelings come at moments where we may still have responsibilities—such as a remaining balance on your mortgage.

If you plan to sell your home before you fully pay off your mortgage, below are some things you need to consider first.

1. Setting up a Mortgage Discharge

One of the first things you need is to set up a mortgage discharge with your lender. You will need to talk to your lender and submit specific documentation that they will require. Depending on your balance, some lenders will also make you pay a discharge fee and even a break fee.

The mortgage discharge will free you from the obligation of paying anything once you sell your home. While this process will usually only take a week or two, we recommend that you file it as early as four weeks before your next settlement date.

2. The Selling Price

Now that you have a mortgage discharge, you are ready to sell your home. But for how much exactly do you sell it? At this point, you should already have come up with a price upon discussion with your real estate agent, but if you haven’t, then don’t worry.

The best way to know the price is to check your home’s market value and factor in any additions or improvements you have made. In addition to this, you will also need to consider the remaining balance on the mortgage. Sometimes, you may come up with a value over the remaining balance on your mortgage, which can benefit you. However, there may be cases where your selling price is short of the remaining balance on the mortgage.

3. Negative Equity

When selling your property equals below the outstanding mortgage balance, it is referred to as a “negative equity.” In this case, there are a few options that you can consider.

On the one hand, you can wait a few more years to increase your equity. This way, when you sell your home, you will be able to do so at an amount that can cover the remaining balance on your mortgage.

On the other hand, you can talk to your lender to see if they can approve of the selling despite the short on the equity. In these cases, the lender will ask you to cover the remaining balance in cash or an asset.

There may also be a chance that your lender will go through your mortgage insurer to cover the shortfall if there is no way to cover it. If the insurer agrees, you can proceed with your sale with the insurer covering the remaining balance, and you will have your own arrangement with the insurer.

4. Buying First Before Selling

Most people sell their property to buy a completely new one. However, selling your former property can take some time, and buying a new one will take a while if you have to wait.

However, if you are financially stable and well-off, you may be able to handle two properties simultaneously. So buying before you can sell the previous one may not be a problem, and you will have the luxury of finding just the right buyer for your property without compromising too much.

However, it is recommended that you sell your property first before purchasing a new one. While this may take longer, it will ensure that you are more financially stable. To ensure the sale of your previous property first, you can improve your home to make it more valuable, or you can get the help of professional estate agents.

5. Bridging Finance

In the process of purchasing a home, there are many timelines and closing dates, and many of them do not match up, sometimes creating a need for additional capital. 

Have you purchased a new home but your current home has not settled yet? The funds you need to complete your new property purchase is tied up within the equity in your old home. Lenders can assist in lending you the funds you need to complete your new purchase while your old home is in the market for sale, most lenders will give you a timeline of 6-12 months bridging finance to sell your old home and use the proceeds to bring down your loan amount. 

You have to speak with your lender or mortgage broker to find out if you qualify for bridging finance. 


If you feel like you are ready for the next part of your life, but you still have a mortgage responsibility, don’t worry. It is not impossible to be free of your mortgage, and you can still sell your property. Just consider the things listed above when doing so, and everything should go smoothly.

If you need a mortgage broker in Sydney, get in touch with Wealthy You. We have been servicing Sydney for almost a decade, providing the right mortgage solutions for all financing needs. Contact us to learn more about your options today.