“What happens with my mortgage?” is a question many homeowners ask when they’re thinking about selling their home. If you've started the selling process already, or it's on your to-do list, here are some key things to consider.

Selling then buying: transferring your current loan

When you sell your home and buy a new one at the same time, you may be able to transfer your current mortgage to the property you’re buying.

If there may be some time between selling your home and buying a new one, your lender may be able to switch the loan principal to a term deposit for a short period until you purchase another property.

Of course, before ‘swapping’ your loan, always make sure you understand the terms of your current mortgage. Talk to your lender or financial adviser to help you weigh the pros and cons so you can make the best decision for your situation.

Selling then buying: getting a new loan

There are a few simple steps to closing out your current loan and getting a new loan for another property. While lenders have different ways of working, here’s a simple guide to the process.

First, you’ll need to contact your lender and let them know that you’re selling. They’ll explain what you need to do to enable them to ‘discharge’ your current mortgage, including providing them with the contract of sale for your current property when you have it.

Once your lender has approved the discharge of your mortgage, they’ll provide you with a loan payoff statement. This statement generally shows the outstanding balance on your loan and any exit / payout fees that may be due.

When you apply for a new loan for your next property, if you’re switching lenders you’ll need to provide the loan payoff statement as part of your application. Upon approval, your new lender may send the funds to your current lender to pay off the old loan’s balance.

If you’re applying for a new loan with your current lender, you’ll still need to go through the application process. It’s important for lenders to ensure your new loan will still be affordable, and they’ll want to verify your current financial situation.

Whether or not you’re switching lenders, once you’re approved and you’ve closed on your new property, your lender will guide you through the home loan settlement process and help get you set up with your new mortgage.

With home loans, it makes sense to understand your options before making any decisions. A Suncorp Bank lending specialist can help answer your lending questions and help you make your next home loan move with confidence.

Talk to a home lending specialist

Published 5 July 2023