Juggling the sale of your current home while buying a new one feels like a high-wire act. What if you fall? Fortunately, with a simultaneous settlement, you can step seamlessly from one home to the next on the very same day. In this guide, we’ll cover realistic scenarios, alternatives, and expert mortgage broker tips to make the process smooth and financially savvy.
Quick Summary
- Simultaneous settlement allows you to buy a new home and sell your existing home on the same day
- It avoids temporary housing and paying two mortgages, but is complex to coordinate
- Key considerations are how quickly your home will sell, how much equity you have, and whether to use a guarantor
- Extending the settlement period and bridging loans are alternatives to simultaneous settlement
- Get an experienced mortgage broker to help navigate the process
What Is Simultaneous Settlement?
Settlement is the final step when transferring property ownership from the seller to the buyer. It is the stage where you pay the remaining amount of the purchase price and are given the keys to your new home. It usually happens weeks (sometimes months) after you have exchanged contracts of sale and paid your deposit.
A simultaneous settlement means arranging for the settlement for the sale of your old property and the settlement of the purchase of your new home to happen at the same time. The deposit for the new home comes from the sale of your old home!
In simple terms, you buy your new home at the same time that you sell your old one.
With a simultaneous settlement, the money from selling your old property goes towards paying off the remaining mortgage, and any surplus will reduce the mortgage on your new home.
Read more: 5 simple steps to settlement.
What Are The Steps Involved?
Simultaneous settlement can be a little tricky to coordinate, so we recommend getting a good mortgage broker.
Here are the steps involved:
- With the help of your mortgage broker, get a pre-approval from your bank to purchase the new home, but on the condition that you will sell your existing home at the same time.
- Put your home on the market. You can get a real estate agent to help you put your home up for sale.
- While your house is being prepared to go on the market, start looking for the home you want to buy.
- Hire a lawyer or conveyancer to help you with the settlement process.
- Once you get an offer for your old home and have gone past the cooling-off period, then put an offer for the new home. If you put in an offer on the new home while the old home is still in the cooling-off period, you run the risk that the buyer may decide they no longer want to purchase your old home when you have already paid a deposit for the new home.
- Arrange for a long settlement period on the sale of your house – even up to 6 months – with the option of bringing it forward as long as you give 4 weeks’ notice. This gives you enough time to negotiate on the new property and then bring forward the settlement on the old property so that they settle simultaneously. It is easier to bring forward a settlement date than to push it further.
- Discharge the mortgage on the old property and establish a mortgage on the new property.
- Register the transfer of title and mortgage with your state authority.
- Congratulations! You can now move from your old home directly into your new home!
Even though we have simplified these steps as much as possible, simultaneous settlement is a very tricky process. It requires experienced mortgage brokers to ensure your paperwork is all on point. The last thing you want is to have your new loan declined on settlement day!
What makes simultaneous settlement tricky?
It’s tricky for a couple of reasons. Number one is the deposit when you’re buying a new home. So when you sign a contract on a new home to buy, you might need to put down an initial deposit (sometimes a thousand dollars) and then a balance deposit, which is usually between 5 and 10% of the purchase price. But it gets complicated because ALL your deposit is coming from the sale of your home, which isn’t going to happen for 90 days.
So what can you do?
The first thing you can do is renegotiate with the agent to see if you can reduce the deposit amount on the balance deposit instead of 5% to whatever you’ve got on hand because those funds aren’t going to be available until you sell your home.
The second option is to borrow money from Mom and Dad, friends, and relatives for that balance deposit.
The third option is looking at a deposit bond. Now, this is something that used to be really common when you didn’t have the deposit funds. It’s a third party that pretty much guarantees that you’re good for the 5% deposit that’ll be paid when you sell your property. It does cost money for a deposit bond and you do need to ask the real estate agent and the sellers for consent to use it. But it can be a good solution if you don’t actually have the cold hard cash in your account today.
Read more: What is a pre-approval?
How Does Finance Work With A Simultaneous Settlement?
So, in the case where you might have bought first and not yet sold your place, how is the bank going to assess your application? With several banks, they can actually make it a settlement condition that your current home sells on or before you move into the new home.
So, in other words, the bank is saying you need to sell your family home before or on the same day you buy the new home. That way, the 20% deposit funds become available, they get put in the account, and that goes towards the deposit of your new home.
Now, the risk with this condition is you can actually buy a property without putting any clauses in the purchase contract saying that your purchase is subject to your existing property selling. Not having this clause when making an offer will help you get your offer accepted.
So when you’re financing, you might make an offer that is subject to, say, 14 days for finance. The bank will approve your loan and put a condition on your finance approval to say that your existing home must settle simultaneously with the new home. There can be a big risk here because everything can fall over if you can’t sell your house in that time.
CAUTION! Why You Need A 'Subject To Sale' Clause
So, when you’re making offers to purchase a property, your solicitor will recommend putting a subject to sale clause in place. This clause protects you and says that your purchase is subject to your existing property settling. Since the market is very competitive, we’re seeing a troubling trend where buyers are waiving their subject to sale clause.
So they’re going in to purchase a property and saying we don’t have any conditions or requirements to sell our existing home. They’re running the gauntlet to make sure that they sell their property on or before the purchase happens. As we said, this is a serious risk because if you don’t sell your property before your purchase happens, the bank will not fund you the loan.
Advantages of Simultaneous Settlement
Simultaneous settlement has many advantages:
- There is no need for temporary accommodation. This is one of the biggest advantages because you can move straight from your old home into your new home without worrying about finding a place to rent, staying with friends and family and putting your furniture into storage – these are all issues you face if you buy first. So simultaneous settlement not only saves you money on temporary accommodation but also saves you a lot of hassle.
- You can move on the same day. If you are doing simultaneous settlement, vacant possession of the property is usually granted on the day of settlement (or the next day)
. This reduces your removal costs, and you don’t even spend a single night in temporary accommodation. - You won’t have to pay two mortgages at the same time, i.e. a bridging loan. With simultaneous settlement, you won’t have to take out a bridging loan. You need a bridging loan if you buy a new property before selling the old one. Bridging loans can be expensive and usually come with a time limit of 12 months.
- You can refinance the loan on your existing home and replace it with the loan on your new home in the same transaction, saving you money in transaction fees.
- With simultaneous settlement, you can disconnect and reconnect services from your old property to your new property in one phone call or email.
Read more: 21 easy tips to find the right mortgage broker.
Disadvantages of a simultaneous settlement
A simultaneous settlement also has its disadvantages:
- It isn’t easy. Simultaneous settlement is not something you can DIY. It is a very complex arrangement that usually requires the expertise of a mortgage broker, a lawyer, or a conveyancer to help you with all the legal and financial paperwork.
- Lots of parties are involved – which increases the chances of something going wrong. As the saying goes, too many cooks spoil the broth. You will require payment from the person buying your property, and the seller will require payment from you. This means the buyer’s bank, your bank, and the seller’s bank should have all their requirements met – and we know that each lender has different requirements.
- Your negotiation skills must be on point: If you have stipulated an extended period for the settlement of your old home, then if you find your new place early, you will have to negotiate to reduce the settlement period with your buyer. Your buyer may not always agree to this unless it is stipulated in the contract. If you buy first before your old home is sold, you will have to negotiate for ‘subject to completion of sale’ of your old property, and the seller may not agree to this. You may need to compromise on price. Since timing is everything when it comes to simultaneous settlement, you may have to sell your home for a little lower than desired or buy the new home a little higher than planned.
- The settlements rely on each other. If there is a problem with one of the processes, it can cause delays, which may mean lots of money in penalties and, in extreme cases, the loss of the deposit on your new property. It is also possible that the other party may be involved in their own simultaneous settlement!
All these disadvantages make it very necessary for you to get an experienced mortgage broker because a single mistake can cost you thousands of dollars.
What Are The Costs Involved?
While a simultaneous settlement can save you the stress of bridging loans, it does come with costs. Understanding these upfront helps you budget and avoid surprises.
Legal and Conveyancing Fees
You’ll need a solicitor or conveyancer for both the sale and the purchase.
- Selling your current home requires legal work like preparing the contract and handling settlement documents.
- Buying your new home involves title searches, reviewing the contract, and liaising with the bank.
For example, if your conveyancer charges $1,500 per transaction, you could be paying around $3,000 in total for both properties.
Bank Fees
Lenders often charge fees when you close one loan and open another.
- A mortgage discharge fee is usually $200–$400 when paying out your old home loan.
- A new loan may include application, valuation, and settlement fees. These can range from $500 to $1,000 depending on the bank.
Say you discharge your old mortgage at $300 and pay a $700 setup fee for your new loan. That’s already $1,000 in bank costs alone
Risk of Penalty Interest
Timing is everything with simultaneous settlement. If your sale or purchase is delayed and you are at fault, you may be charged penalty interest.
- For example, if the seller of your new property is forced to wait because your funds aren’t ready, you could be charged interest on the purchase price for every day of delay.
- On a $600,000 property, even 10% penalty interest adds up to around $164 per day.
Government Charges
There are also state government charges linked to your purchase.
- Stamp Duty: Payable on your new home and usually the biggest upfront cost.
- Registration Fees: The Land Titles Office charges a fee to register the transfer of ownership and your new mortgage. In Queensland, this can be several hundred dollars.
Unexpected Delays
If settlement doesn’t line up perfectly, you may face extra costs.
- You might need temporary accommodation or storage while waiting.
- In rare cases, short-term finance may be required, which brings additional fees and interest.
Why It Matters
These costs can add thousands to your overall move. Planning early, working closely with your conveyancer, and communicating with your lender will help you avoid unnecessary charges.
Case Study: Sarah & James Upgrade To A Family Home In Brisbane
Sarah and James were expecting their first child, and needed more space. They owned a 2-bedroom apartment in West End and were aiming for a 4-bedroom home in Carindale.
Financial Overview:
- Current Apartment Value: $850,000
- Mortgage Balance: $300,000
- Equity Available: $550,000
- New Home Price: $1,200,000
- Deposit Needed: $240,000
- Loan Amount: $960,000
Simultaneous Settlement Process:
Sarah and James worked closely with a mortgage broker to coordinate both the sale of their apartment and the purchase of their new home, ensuring both contracts settled on the same day. The broker helped manage the approvals, communicate with the bank, and structure their loan efficiently. A conveyancer handled the legal paperwork for both properties, guaranteeing a smooth and compliant process.
Benefits Experienced
- Financial savings: By using simultaneous settlement, Sarah and Tom avoided a bridging loan that could have cost them an estimated $12,000 in extra interest over three months.
- Reduced living costs: They also avoided renting or paying for storage during the transition. With average rental costs in Brisbane at $600 per week, this saved them around $7,200 over three months, plus an additional $1,500 in storage fees.
- Convenience and stability: They moved directly from their old unit into their new home on settlement day. This meant no temporary housing, no double handling of furniture, and less stress for their family.
What Is The Best Option For Me?
Before deciding whether or not to go the simultaneous settlement route, you need to ask yourself these three key questions:
- How easy will it be to sell my house?
- How much equity do I have in my home?
- Should I use a guarantor?
1, How easy will it be to sell my house?
If you’re not sure about the market conditions where you currently live, it’s best to have a quick chat with a real estate agent. They’re always happy to appraise your home and tell you how much they can sell your house for and potentially how quickly they can do it. You definitely want to have a pretty frank conversation with them and let them know you are planning to buy a house at the same time, so they should give you an honest answer. Can they sell it in 30 days, 60 days, 90 days or 6 months? How quickly are properties turning over in the suburb? If they say it’s a bit of a sluggish market and it’s going to take 6 months, you need to take this into consideration because if you’ve signed a contract on a new home, you will need your old home to settle at the same time or before you move into the new home.
The major downside of selling first is that you might end up selling your house faster than you thought and then having to move into a rental because you haven’t quite found a new home. It’s worth talking to your parents, friends, or family to find out if you could temporarily move in with them in case you sell your house really fast.
2. How much equity do I have in my home?
Understanding your home equity is a key factor when considering a simultaneous settlement. Equity is the difference between the current market value of your property and the amount you still owe on your mortgage.
If you have enough equity, you may be able to buy a new home first and then sell your existing property. This approach allows you to use your equity to cover the deposit and other associated costs. However, if your equity is low, you may face additional expenses such as lenders mortgage insurance (LMI), which should be factored into your calculations.
When buying first, keep in mind that you will need to manage repayments on both properties until your existing home sells. Consider whether you can afford:
- Dual mortgage payments temporarily
- Ongoing living expenses for both properties
- Potential LMI or other upfront costs if your equity is insufficient
Buying first also gives you more control over the sale of your current home. For example, if your new property has a 90-day settlement period, you have three months to sell your existing home. This allows you to align settlement dates and move smoothly into your new home without the pressure of timing constraints.
Other advantages of selling first include:
- Avoiding temporary rentals: You can move directly into the home you want.
- Flexible decision-making: No rush to sell your existing property before making an offer.
- Better planning: You can negotiate settlement dates confidently, knowing your new home’s schedule.
It’s important to be financially prepared for this approach. Supporting two mortgages for even a short period can be challenging, so work closely with a mortgage broker to run the numbers and ensure you’re comfortable with your financial position.
3. Should I use a Guarantor?
If you don’t quite have enough equity in your home, have a mum or dad that can help, and you don’t want to pay mortgage insurance, you can consider getting a mom or dad to go guarantor on your property.
So, if you are planning on selling your existing property in the short term, you can use a parental guarantor in the medium term to help get in that property, and then, once you’ve sold your existing home, you can pay down the debt and remove the guarantors. This is a good option if mom and dad are happy to help and understand that it could be a short-term solution. However, there are lots of risks with guarantor loans, so definitely speak to your mortgage broker. Some banks will only do guarantor loans for your first home, not a second and not an investment property.
Bridging Finance As An Alternative To Simultaneous Settlement
If a simultaneous settlement isn’t possible, a bridging loan can be a useful alternative. This type of loan allows you to buy a new property before selling your existing one, without immediately increasing your total repayments.
With bridging finance, you typically have up to 12 months to sell your current home. Depending on the bank, you may not need to make repayments on the bridged amount during this period. Instead, repayments can be capitalized or added to your existing loan, reducing financial pressure while you arrange the sale.
However, bridging loans come with some considerations:
- Higher interest rates: Bridging loans are generally more expensive than standard home loans.
- Equity requirements: Lender requirements vary, but they often look for significant equity in your existing property. For example, some may require you to have at least 40% of the total debt covered by your equity.
- Single-bank requirement: Bridging loans usually must be arranged with one lender. If your current bank doesn’t offer bridging, you may need to refinance, which can take 6–7 weeks and involve additional paperwork.
Bridging finance can be a practical solution for buyers looking to upgrade, but it’s important to understand the costs and requirements. Consulting a mortgage broker can help you determine if a bridging loan is suitable for your situation and guide you through the process.
Extending The Settlement Period (avoid this mistake)
As we mentioned above, it is common for homebuyers who go the simultaneous settlement route to have very long settlement periods of up to 6 months.
There are two ways to do this:
- Option 1: You can sell your old home before finding a new one and then have the option to bring forward settlement when you find the right property so that both properties settle on the same day. The risk with this is that if you don’t find the right property in time, you may have to move to temporary accommodation. This is a better risk than option 2.
- Option 2: You buy your new home before selling the old one and then have a settlement of 6 months on the new home with the option of bringing it forward when you sell the old home. This is very risky because if you don’t sell your old home in time, you might lose the deposit on your new home – that’s thousands of dollars! So we don’t recommend using this option.
Frequently Asked Questions
Simultaneous settlement can be complex. To help, we’ve compiled some FAQs. These will guide you through the process and make it easier to understand.
What is simultaneous settlement?
A simultaneous settlement happens when you buy a new home and sell your existing property on the same day. This allows the funds from your sale to be applied directly to your new home purchase. It helps avoid temporary accommodation and extra mortgage costs.
How do I sell and buy a house at the same time?
To sell and buy a house at the same time, coordinate contracts and settlement dates with your bank, real estate agents, and conveyancer. Using a mortgage broker can simplify approvals and ensure funds are ready. Careful planning reduces the risk of delays or financial strain.
What is a simultaneous settlement clause in QLD?
A simultaneous settlement clause allows the purchase of a new property to be conditional on the sale of your existing home. It protects buyers from financial risk if their current property doesn’t sell on time. Conveyancers can add this clause to contracts in Queensland for legal security.
How does bridging finance work vs Simultaneous settlement?
A bridging loan allows you to buy a new home before selling your current property. You can defer repayments on the bridged amount, often for up to 12 months. Bridging loans require sufficient equity and are usually arranged through a single bank.
How long does a house take to settle in Australia?
In Australia, the house settlement process typically takes 30 to 90 days in most states. Settlement involves finalising legal documents, transferring funds, and registering the title. Timing can vary depending on bank approvals and contract conditions.
Can you move in before settlement?
Generally, you cannot move into a home before settlement unless your contract allows early possession. Some buyers negotiate a separate agreement with the seller for early access. Moving in before settlement without permission can create legal and financial issues.
What happens on settlement day for buyers?
On settlement day, the buyer’s funds are transferred to the seller, and ownership officially changes. Your mortgage lender finalises the loan, and you receive the keys to the property. It is the final step in the mortgage settlement process.
What happens on settlement day for sellers?
Sellers receive payment from the buyer’s lender or deposit account on house settlement day. They must ensure all documents are signed and mortgage obligations are cleared. Once complete, the seller no longer owns the property.
Can you sell a property before settlement?
Yes, you can sell a property before settlement, but ownership doesn’t transfer until settlement day. Buyers may pay a deposit to secure the contract. The settlement date ensures legal transfer and mortgage adjustments occur correctly.
What is the difference between settlement date vs move-in date?
The settlement date is when ownership and funds officially transfer. The move-in date may be the same or later, depending on contract terms. Coordinating both ensures a smooth transition without temporary housing needs.
How soon can I sell my house after purchase in Australia?
You can technically sell your home immediately after purchase in Australia, but some lenders or contracts may have restrictions on resale. Selling soon after purchase may affect taxes or capital gains considerations. Planning with a mortgage broker helps you manage timing effectively.
How to sell and buy your home at the same time successfully?
To buy and sell at the same time, plan settlement dates carefully and work with a mortgage broker for approvals. Ensure you have adequate equity and financial flexibility. Professional guidance reduces risks of delays, dual payments, or failed settlements.
Next Steps And Getting Your Home Loan
Simultaneous settlement can make moving from your old home to your new home quite smooth. However, the process needs to be handled with much extreme care…
Our team at Hunter Galloway is here to help you buy a home across Australia.
Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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