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What is a simultaneous settlement?

What is a Simultaneous Settlement?

You may have been recently thinking about how much your property is worth on the market and the needs you have. Perhaps you don’t need the space or are thinking of downsizing for retirement, or you may be needing more space for the growing family, a bigger yard or a pool.

You may also be considering how much it would cost to upgrade the house and comparing additional costs for renovations and extensions. If you did sell, how much would I lose, or how much would I have left to make it worthwhile?

We can help you understand the options and next steps in the process.

Settlement is the last step in the sale of a property and is the final process of transferring property ownership to the new owner. Basically, settlement is when the buyers finish paying the full price of their new home and receive the keys. This usually takes place a few weeks or months following the exchange of contract and payment of deposit.

A simultaneous settlement is where the settlements for the sale of your own current home and the purchase of your new home take place at the same time.

How Do You Buy and Sell a House at the Same Time?

Mortgage broker Newcastle

Provided everything goes according to plan, a simultaneous settlement can alleviate problems such as needing to rent in the interim period of selling and buying a house. So how is it successfully carried out?

Selling your Property First

When an individual has a simultaneous settlement and decides to sell their property first, the settlement is drawn out up to six months, with a clause to allow them to move the date up with notice to the buying party of four weeks in advance. This long settlement allows them to look for a new home and then notify the other party to move the settlement up, so that both their homes can settle on the same day.

If the selling individual does not find a new home in that six-month period, then they risk needing to rent after their house settles and sells.

Buying a Property First

When an individual buys a new home, they can request a long settlement period of six months, with a clause that allows them to bring the date up when they sell their existing home. This long settlement allows them to sell their existing home and then notify the other party to move the settlement up so that, again, both their homes can settle on the same day.

The risk of this is that if you cannot sell your home within the agreed period, you might lose the deposit on the new property.

Step #1: Choose to Buy a New Property First OR Put Your Property up for Sale

Sold sign on house

Making the choice to either buy a new property or list your property for sale will allow your mortgage broker and conveyancer to organise the right simultaneous settlement plan for you. It will also reduce your chances or having to carry two home loans or resort to renting as a result of bad timing.

Step #2: Get Assistance from a Conveyancer

Settlements are not usually straightforward. A simultaneous settlement relies on good timing and requires your deeds of transfer, clearing out your current loan and applying for and receiving a new loan can take place in the correct order to avoid penalties and an uncomfortable situation.

Step #3: Organise an Extended Settlement Term

Mortgage document

If you can, organise an extended settlement term for either selling your property or buying a new one.

For example, if you want to buy a new home, you can request a longer settlement to give yourself some time to sell your current property. If you decide to sell your home first, you’ll need to ask for a longer settlement so that you can look for a new home before you settle your old one.

Step #4: Pay off the Mortgage on Your Current Property

When your property is sold, paying off and discharging your home loan consists of letting your lender know that you’d like to settle your mortgage and then filling out a discharge authority form. Your mortgage broker will be there during this process to help you fill out this form and avoid any unnecessary mistakes and delays.

After this form is filled out and sent back to the lender, the lender will create a discharge of mortgage document, which is registered at the Land Titles Office in your state, usually by your mortgage broker. This whole process of discharging your current mortgage could take up to 15 days.

Step #5: Talk to our Mortgage Brokers

Nestor Ramirez, Senior Mortgage Broker at Watson Mortgages

If required, you will then take on a new mortgage for your new property purchase. This is the time to sit with your mortgage broker and compare rates, fees and features for the best loan product for your property. Your mortgage broker can also work with you to avoid Lender’s Mortgage Insurance, which will help you save big on your loan.

You may also want to consider getting pre-approval from your new lender, which will let you know how much you can borrow and usually stays valid for 3-6 months. Pre-approval is also a great idea, as it does not lock you into anything but shows you the loan price you can afford and communicates to agents and sellers that you are seriously in the market for buying.

Step #6: Register the Title Transfers and Any New Mortgages

This is where you will need your conveyancer to help you register the title transfers, along with any new mortgages with the Land Titles Office of your state.

Step #7: Move out of your Old Home and into your New One

Speak to your mortgage brokers to find the best way to plan your simultaneous settlement and work out the loan product to get you closer to the home of your dreams. Call Watson Mortgages on 02 4018 7505 to make an appointment with one of our experienced Brokers today; we’ll explain how to sell and buy at the same time successfully.


Disclaimer: The information provided in this fact sheet is not legal, taxation or financial planning advice. It has been prepared without considering your specific needs, objectives and personal financial situation. Before acting on this information, we recommend that you consider carefully if it is appropriate for your needs, objectives and personal financial situation. All loan products are subject to lender criteria and approval. Fees, terms and conditions apply. Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Licensing Statement: Watson Mortgages Pty Ltd Credit Representative 525053 is authorised under Australian Credit Licence 389328.

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