How to buy and sell property on the same day? Simultaneous Settlement Explained

You've found a new home you really like. The location works, there's enough room for the family, and you're already thinking about where the furniture will go. There's just one problem. You still need to sell your current property to pay for it.

It's a fairly common situation for Australian homeowners looking to upgrade, downsize or relocate.

Buying and selling two properties around the same time can be tricky, particularly when the money from your existing home is needed to complete the next purchase. You might worry about having to pay two mortgages, arrange temporary accommodation or move everything into storage.

One option worth considering is simultaneous settlement. It allows you to complete the sale of your existing property and the purchase of your next home on the same day.

But how does it actually work, and what happens if something goes wrong?

What Is Simultaneous Settlement?

Simultaneous settlement is when the sale of your existing property and the purchase of your new property are completed on the same day, with both transactions coordinated.

Say you're selling your Melbourne home for $850,000 and purchasing another property for $1 million.

You still owe $300,000 on your current mortgage. Once that loan is repaid and selling expenses are covered, the remaining money can go towards purchasing your new home.

Rather than waiting for the sale proceeds to reach your account and organising a separate purchase settlement later, your conveyancer and lenders coordinate the transactions so the available funds can move between settlements.

In Victoria, property settlements are generally completed electronically, with conveyancers, legal representatives and financial institutions managing the process.

The important part is making sure everyone involved knows that one transaction depends on the other.

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How Does Simultaneous Settlement Work?

A same-day settlement isn't something you can organise at the last minute. There are contracts, banks, buyers, sellers and conveyancers involved, and everyone needs to work towards an agreed date.

Here's what the process generally looks like.

1. Understand Your Financial Position

Before making an offer on another property, work out how much equity you have in your existing home.

Your equity is the difference between your property's market value and the amount owing on your mortgage.

You'll also need to account for selling expenses, stamp duty on the new purchase, conveyancing costs and any additional funds required.

Speaking with a Mortgage Broker Melbourne homeowners can consult early in the process may help clarify how much you can borrow and what needs to happen before settlemen

2. Coordinate Both Settlement Dates

Once you've found a buyer for your existing property and a suitable home to purchase, the next challenge is aligning the settlement dates.

In Victoria, settlement periods commonly range from 30 to 90 days, although the exact period depends on the contract. If your buyer agrees to a 60-day settlement, you might negotiate a similar timeframe with the seller of your new property.

It's important to have your conveyancer review the contract terms before you sign. Simply having matching dates doesn't necessarily protect you if one transaction falls through.

3. Arrange Your Home Loan

Your lender needs to know you're selling one property and buying another. Depending on your circumstances, you may need a new mortgage, a refinance arrangement or a transfer of your existing loan to the new property.

Some lenders offer loan portability, which may allow you to retain an existing loan while changing the property used as security.

This is also where experienced Refinance Mortgage Brokers can help you compare suitable arrangements and understand whether keeping or replacing your existing loan makes financial sense.

4. Complete Both Settlements

On settlement day, the conveyancers and lenders coordinate the sale and purchase. The proceeds from your existing property are used to discharge the outstanding mortgage and cover relevant costs. The remaining available funds can then contribute towards your new property purchase.

Once the purchase settlement is completed, ownership transfers and you can generally collect the keys, subject to the contract's possession arrangements.

Ideally, you leave one property and move into the next without needing temporary accommodation.

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What Are the Benefits of Settling Both Properties on the Same Day?

The biggest advantage is convenience, particularly if you're relying on the sale of your existing property to fund your purchase.

There are also some practical financial benefits.

• Avoiding overlapping mortgages: You may not need to carry two home loans for an extended period.
• Fewer moving expenses: Moving directly between properties can reduce storage and temporary accommodation costs.
• Using existing equity: Available sale proceeds can contribute towards your next purchase.
• Less time between properties: You can avoid an extended period of renting while searching for another home.

Of course, these benefits depend on both transactions proceeding as planned.

What Happens If One Settlement Is Delayed?

This is probably the biggest concern with simultaneous settlement. Imagine your buyer's lender isn't ready to release the funds on settlement day. Your existing property sale gets delayed, which means the money you were expecting to use for your purchase may not be available. Now your purchase could also be delayed.

Depending on your contracts, this may create additional costs, legal complications or potential penalties. Even something relatively small, such as an outstanding document or unexpected issue with a lender, can disrupt the schedule.

This is why communication between your conveyancer, mortgage broker and lenders matters so much. Your conveyancer should also advise you about contractual protections and what happens if settlement cannot proceed.

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What If You Can't Align Both Settlement Dates?

Sometimes, the dates simply won't work. Your buyer might need extra time to arrange finance, or the seller of your next property may want a much shorter settlement. In that situation, you still have options.

One is a bridging loan, which may allow you to purchase a new property before selling your existing home. However, bridging finance comes with additional costs and lending requirements, and it's not suitable for everyone.

Another possibility is negotiating a longer settlement period or arranging to rent back your existing property for a short time after selling it. You could also sell first, move into temporary accommodation and purchase once your funds are available.

Each option involves different costs and risks. It's worth comparing them before committing to a purchase.

Is Simultaneous Settlement Right for You?

That depends on your finances, how quickly your existing property is likely to sell and whether both parties can agree on suitable dates.

If you have a confirmed buyer, sufficient equity and finance organised, simultaneous settlement may be a practical approach.

If your property hasn't sold yet, committing to another purchase can be considerably riskier.

A First Home Buyers Broker generally helps people entering the property market, while homeowners buying their next property may need advice about equity, refinancing and coordinating two transactions.

Getting the right financial guidance early can save considerable trouble later.

Planning to Buy and Sell? Speak with Loan Studio

Selling one home while buying another involves more than finding the right property. You need to understand your borrowing capacity, available equity and how your existing mortgage fits into the next purchase.

At Loan Studio, we help you work through the finance side of buying and selling, whether that involves arranging a new home loan, exploring refinancing options or understanding bridging finance. We know the timing can feel tight, especially when you're depending on one settlement to fund another.

Thinking about buying and selling property on the same day? Get in touch with Loan Studio. We'll help you explore your lending options and plan your next property move with greater confidence.