Sell House on Loan? Here's How to Gain Control (2026)

Considering selling your home while still on a mortgage? It's a common scenario many Australians face, particularly in today's volatile real estate market. Whether it's due to changing financial circumstances, a growing family, or simply the desire for a new environment, selling a house with an existing loan involves careful planning and understanding. Let’s navigate this journey together.

Understanding Selling a House on Loan

When you sell a property that still has a mortgage, you are essentially transferring ownership while the debt still exists. The goal here is to ensure that the sale price covers the loan balance, or else you might face a shortfall. In 2026, many homeowners in Australia are taking this path as property values fluctuate and personal circumstances evolve. Before proceeding, let's delve into the process and implications of selling a mortgaged home.

Rates, Requirements, and Options

As of 2026, the Australian real estate market presents unique challenges and opportunities for sellers. Here’s what you need to know about the current landscape:

Interest Rates: The interest rate environment in Australia is experiencing fluctuations, with home loan rates typically ranging from 6.49% to 12%. This range impacts the affordability of loans and should be a key consideration when planning your sale.

Mortgage Balance: To sell your home, your outstanding mortgage balance must be settled at settlement. This means that the sale proceeds need to cover this amount, along with any related fees and taxes.

Early Repayment Fees: Some mortgages entail early repayment fees if you pay out the loan before the end of the term. Check with your lender to understand any potential costs involved.

Steps to Sell a House on Loan

Here’s a step-by-step guide to help you navigate selling your house while it’s still under mortgage:

1. Evaluate Your Financial Situation: Start by assessing your current mortgage balance, your home’s market value, and any potential costs involved in selling.
2. Consult with Your Lender: Inform your lender of your intention to sell. They can provide details on the outstanding balance and any conditions tied to your loan.
3. Engage a Real Estate Agent: Choose a reputable agent who understands the intricacies of selling a mortgaged home. Their expertise can help you set the right price and market your property effectively.
4. Set a Competitive Price: Work with your agent to determine a price that covers your mortgage and is attractive to buyers, considering current market conditions.
5. Negotiate Offers: Once offers come in, negotiate to ensure the sale will cover your mortgage and any additional costs.
6. Proceed with Settlement: Coordinate with all parties involved to ensure a smooth settlement process where the mortgage is paid out from the proceeds of the sale.

Expert Tips and Considerations

Here are some expert tips to consider when selling a home with an existing mortgage:

• Understand Your Loan Terms: Familiarise yourself with your loan agreement, especially any clauses about early repayment or selling the property.
• Work with Professionals: Leverage the expertise of financial advisors, real estate agents, and mortgage brokers like Esteb and Co, who have access to over 83 lenders.
• Plan for Contingencies: Have a financial buffer in case the sale doesn’t cover the total mortgage amount or unexpected costs arise.
• Consider Refinancing: If you’re buying a new home, explore refinancing options that might be more favourable, possibly with better rates or terms.

Frequently Asked Questions

1. Can I sell my house if it's worth less than the mortgage? Yes, but this might involve a short sale, where the lender agrees to accept less than the mortgage owed. Consult with your lender and a financial advisor.
2. What happens to my mortgage when I sell my house? The mortgage is paid off using the proceeds from the sale during the settlement process.
3. Are there tax implications when selling a house with a mortgage? Generally, taxes are based on the capital gain, which is the difference between the sale price and the original purchase price.
4. How long does it take to sell a house on mortgage? This varies based on market conditions, but typically it can take a few months from listing to settlement.
5. What if I have a fixed-rate mortgage? Selling with a fixed-rate mortgage might incur break fees. Check with your lender for specifics.
6. Can I buy a new house before selling my current one? This is possible, but it may require bridging finance. Discuss options with your mortgage broker.
7. How can Esteb and Co assist me? With access to 83+ lenders, Esteb and Co can offer tailored advice and solutions to make the process seamless.