Selling your home while you still have a mortgage? It’s more common than you might think. Many Kiwi homeowners make the move before their home loan is fully repaid. While it’s entirely possible to sell with a mortgage, there are a few steps you’ll need to follow to ensure a smooth process.
Whether you’re upsizing, relocating, or making a lifestyle change, here’s how to manage the sale of a mortgaged home.
Yes — in fact, most people do. Having a mortgage on your home doesn’t prevent you from selling it. However, your lender will need to be paid the outstanding balance from the proceeds of the sale before the transaction can be finalised.
It’s essential to understand how your loan works and what it means for the sale. The earlier you speak to your bank or lender, the more time you’ll have to plan accordingly.
Your lender holds a legal interest in the property — known as a registered mortgage. When you sell, they must be repaid in full before the title can be transferred to the buyer.
Here’s how it usually works:
Discharge fees vary by lender but are usually in the range of $150 to $400.
Before you put your property on the market, check in with your bank or mortgage broker to understand your current loan situation. Some important questions to ask include:
Understanding this will help you determine what you need to sell for and how much equity you’re working with.
Your equity is the difference between your home’s current market value and your outstanding mortgage. If your home is worth more than your mortgage, you’ll likely have a surplus you can use for your next purchase or other expenses.
Example:
If your home is appraised at $850,000 and your remaining loan is $600,000, your equity is $250,000 (excluding selling costs).
However, if your property sells for less than what you owe, you may need to cover the shortfall. This is known as negative equity, and while rare in New Zealand's housing market, it can occur, especially in slower markets or after borrowing heavily.
Getting a clear understanding of your home’s market value is a crucial first step — and it’s something your local LJ Hooker office can help with.
An appraisal will give you a realistic idea of what your home might sell for, based on recent comparable sales and market conditions in your suburb or region.
Our agents across New Zealand are local experts and can guide you through pricing, timing, and preparing your property for sale.
Once you’ve got your finances lined up and your appraisal completed, it’s time to list your home.
You’ll work with your LJ Hooker agent to:
Your agent will also help you navigate any negotiations and ensure buyers are well-informed throughout the process.
Once you’ve accepted an offer, your solicitor and your lender will work together to discharge the mortgage and finalise the sale.
Make sure the settlement date aligns with your loan discharge timeline. On the day, the mortgage will be repaid from the buyer’s funds, and any remaining profit will be transferred to you.
If your home sells for less than your remaining mortgage balance, you’ll need to make up the difference — usually from your own funds. For example, if you owe $700,000 but your home sells for $680,000, you must pay the $20,000 shortfall before the transaction can complete.
In extreme cases where repayment isn’t possible, lenders may pursue recovery through mortgage insurance or legal proceedings, so it’s crucial to seek financial advice early if you’re in this position.
When selling with a mortgage, keep these other costs in mind:
Budgeting for these expenses helps avoid surprises down the track.
While it may seem complex, selling a property with a mortgage is a straightforward process with the right guidance. LJ Hooker’s local teams are here to support you at every step — from property appraisal to settlement day.
If you’re ready to take the next step or have questions about how your home loan will affect your sale, get in touch with your local LJ Hooker office. We’ll help you understand your options and guide you through a smooth and successful sale.