Most of us dream of becoming mortgage-free, but with the average Australian home loan taking around 25 years to pay off, it’s likely that you’ll still have some repayments left when it’s time to sell.

So, how do you sell your home when you technically co-own it with the bank? While it may sound tricky, selling a mortgaged property is actually a straightforward process—whether you’ve paid off much of the loan or not.

In fact, you have several options, including transferring your mortgage onto your next property whether you're upgrading or downsizing. You can even leave the property market entirely, if that’s your choice.

Before diving into the selling process, it's crucial to understand how your home loan works, your obligations to the lender, and the fees and timelines you’ll need to account for.

Start by getting your property appraised to determine its current value, then work out how much you still owe on your mortgage and how much you’ll need for your next home.

Here’s everything you need to know about selling a mortgaged property in Queensland.

he typical Australian homeowner stays in their home for about 11 years before selling. So, selling with a mortgage is common, and while it might seem complex, it’s actually a standard procedure.

The first step is to contact your lender and inform them that you plan to sell your property. Your bank holds what is called a Certificate of Title for your home. This means they have a legal interest in the property and want to ensure their loan is fully paid when you sell.

To get the process rolling, you’ll need to complete a Discharge of Mortgage form. This form, available on your bank’s website, will require details like:

t’s essential to read through the form carefully and understand the details, as you’ll be authorising the bank to begin processing the discharge.

Keep in mind that the mortgage discharge can take anywhere from 14 to 21 days. During this time, you will still be responsible for making mortgage repayments. A settlement or closing statement will help you calculate the final costs and potential profits from your sale.

At settlement, the proceeds from the sale will be used to pay off the remaining balance of your mortgage. Your lender will also file the mortgage discharge with the Land Titles Office, clearing the property of any "encumbrances" (legal restrictions that could block the sale).

The good news is, moving house doesn’t mean moving banks. Many home loans are portable, meaning you can transfer your existing mortgage to your next property. This can save you time and potentially avoid fees associated with applying for a new loan.

You’ll need a substitution of security to shift your mortgage to the new home. Your lender may even offer incentives, such as lower interest rates, to keep you as a customer. However, if you plan to pay off a significant portion of your mortgage, be prepared for potential break costs, which apply if you end a fixed-rate mortgage early.

While the property market has been on a positive trajectory, selling for less than you owe can happen, particularly if market conditions shift. This is called negative equity, and it occurs when the home’s value is lower than the mortgage balance.

If you find yourself in this situation, you’ll need to make up the difference with personal savings or by selling assets. If you can’t cover the shortfall, your lender may involve your mortgage insurer to recover the difference.

Buying a new property before selling your existing home is possible, but it can be tricky. If you’re looking at this option, two solutions might help:

Keep in mind, bridging loans carry risks, particularly in a fluctuating market.

In addition to bank fees, you’ll need to consider costs such as:

Whether you’re selling a property with a mortgage or not, the first step is to understand the market value of your home. Our agents at #1 Property Centre can give you an accurate appraisal based on recent sales data and market trends in Queensland. This will help you get a clear idea of your potential sale price.

If you’re ready to get started or need more information, contact us today for a free property appraisal. We’re here to help make your next move as smooth as possible.