Refinancing before you sell often feels backwards, but it can unlock equity you need for your next deposit without waiting for settlement.
Most sellers assume they should wait until their property sells before thinking about finance for the next one. That approach can work, but it also locks you into tight timelines and limits your buying power. If you're planning to sell in Highfields and move into another property, refinancing before you list can give you access to funds, improve your borrowing position, and reduce the pressure of lining up two settlements at once.
Why Refinance Before You List the Property for Sale
Refinancing before you sell lets you access equity in your current home without waiting for a buyer. This equity can be used as a deposit on your next property, which means you can buy before you sell and avoid the scramble of temporary accommodation or rushed decisions. Lenders will assess your borrowing capacity based on your current income and the equity available in the property you're about to sell. If your home has increased in value since you bought it, refinancing lets you pull that equity out and use it while you still own the property.
Consider a scenario where someone in Highfields owns a home they purchased years ago. The property has increased in value, and they now have $150,000 in usable equity. They want to buy a larger acreage block closer to Crows Nest but need a deposit to secure it before their current home sells. By refinancing and accessing that equity, they can put down a deposit on the new property and settle both transactions within a few weeks of each other. Without refinancing first, they would need to sell, move into temporary accommodation, and then start looking again once the funds cleared.
How Refinancing Helps You Buy Before You Sell
When you refinance and access equity, you increase your loan amount on the current property and receive the difference as cash. That cash can then be used as a deposit on your next home. Lenders treat this as a standard refinance application, and as long as your income supports the higher loan amount, the process is straightforward. Once your original property sells, you use the sale proceeds to pay down or clear the refinanced loan, and your new property becomes your primary security.
This approach works particularly well in Highfields, where properties can sit on the market for a few weeks depending on the season and price point. If you're selling a family home near Highfields Central and buying closer to Meringandan, accessing equity upfront means you can make an offer without a subject-to-sale clause, which makes your offer more attractive to the seller.
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Releasing Equity Without Waiting for Settlement
A loan health check can show you how much equity is available and whether your current loan structure supports a refinance. Equity is calculated as the difference between your property's current value and what you owe on the mortgage. Most lenders will let you borrow up to 80% of the property's value without needing lenders mortgage insurance, so if your home is valued at $600,000 and you owe $350,000, you could access up to $130,000 in equity.
The refinance application typically takes two to four weeks, depending on the lender and how quickly you can provide documentation. Once approved, the funds are released at settlement, and you can use them immediately. If your fixed rate period is ending or you're coming off a fixed rate and moving to a higher variable rate, refinancing at the same time lets you lock in a lower rate and access equity in one transaction.
When Refinancing Before Selling Does Not Make Sense
If you're planning to downsize or move into a rental after selling, refinancing beforehand may not be necessary. The same applies if your current loan already has an offset account or redraw facility with enough cash sitting in it to cover your next deposit. Refinancing adds to your loan amount and increases your repayments, so it only makes sense if you genuinely need the equity upfront and your income can support the higher loan.
In some cases, sellers in Highfields are moving interstate or buying in a location where they can secure a property quickly without needing a large deposit. If that applies, waiting until after settlement and transferring the full sale proceeds may be more straightforward than refinancing and managing two loans at once.
What Lenders Look at When You Refinance Before Selling
Lenders assess your refinance application based on your current income, the value of your property, and your ability to service the higher loan amount. They will also consider whether you plan to sell the property within a short timeframe. Some lenders will approve the refinance knowing the property is going on the market, while others may decline or require additional documentation.
If you're refinancing to access equity and you've already signed a contract with a real estate agent, mention this upfront. Lenders may ask for a copy of the agency agreement or a letter confirming your intention to sell. This does not disqualify you from refinancing, but it does change how the lender structures the approval. In most cases, the lender will approve the refinance and note that the loan will be paid out once the property sells.
How the Refinance Process Works When a Sale Is Pending
The refinance process follows the same steps as any other refinance application. You submit an application, the lender orders a property valuation, and once approved, the new loan settles. The difference is that you're refinancing with the intention of selling shortly afterward, so the lender needs to be comfortable that you can service the loan in the meantime.
If your property is already listed or under contract, let your mortgage broker in Highfields know so they can present your application in a way that addresses lender concerns upfront. Some lenders are more flexible than others when it comes to refinancing before a sale, and choosing the right lender can make the difference between approval and decline.
Using Equity to Improve Cashflow Before You Move
Accessing equity before you sell can also improve cashflow in the short term. If you're buying a property that needs immediate work or you want to pay for removalists, storage, or temporary accommodation, having cash on hand reduces the pressure of waiting for settlement. This is particularly relevant for families moving from Highfields to nearby rural areas where properties may require fencing, water infrastructure, or other immediate expenses.
Refinancing also lets you consolidate other debts into your mortgage if needed, which can reduce your monthly repayments and improve your borrowing capacity for the next property. If you have a car loan, personal loan, or credit card debt, rolling that into your mortgage at a lower interest rate can free up cashflow and make it easier to manage two properties at once.
What Happens If Your Property Does Not Sell Quickly
If you refinance and access equity but your property takes longer to sell than expected, you'll need to service the higher loan amount until settlement. This is why it's important to run the numbers before refinancing. Your broker can help you calculate what your repayments will be after refinancing and confirm that your income can cover the increased amount for a few months if needed.
In some cases, sellers will refinance, access equity, and then decide to keep the original property as an investment rather than selling. This can work if the rental income covers the mortgage repayments and you have enough equity across both properties to satisfy the lender. If you're considering this option, discuss it with your broker before refinancing so the loan structure is set up correctly from the start.
Should You Refinance to a Fixed or Variable Interest Rate
If you're refinancing before selling and you know the loan will be paid out within a few months, a variable interest rate usually makes more sense. Fixed rate loans often come with break costs if you repay the loan early, and those costs can be significant depending on how much time is left on the fixed term. A variable rate gives you flexibility to repay the loan in full once your property sells without penalty.
If your fixed rate period is ending around the same time you plan to sell, refinancing to another variable rate gives you access to equity and avoids the risk of rolling onto a higher revert rate. Some lenders also offer offset accounts or redraw facilities on variable loans, which can be useful if you want to park the equity funds somewhere accessible until you're ready to use them.
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Frequently Asked Questions
Can I refinance my home if I'm planning to sell it soon?
Yes, you can refinance before selling to access equity for your next deposit. Some lenders will approve the refinance knowing the property is going on the market, while others may require additional documentation or a letter from your real estate agent.
How long does it take to refinance before selling a property?
The refinance process typically takes two to four weeks, depending on the lender and how quickly you can provide documentation. Once approved, the funds are released at settlement and can be used immediately.
What happens if my property takes longer to sell than expected after refinancing?
You'll need to service the higher loan amount until your property sells. Running the numbers with a broker before refinancing ensures your income can cover the increased repayments for a few months if needed.
Should I choose a fixed or variable rate if I'm refinancing before selling?
A variable rate usually makes more sense if you plan to repay the loan within a few months. Fixed rate loans often come with break costs if you repay early, while variable loans let you repay in full without penalty.
How much equity can I access when refinancing before a sale?
Most lenders will let you borrow up to 80% of your property's value without lenders mortgage insurance. The amount you can access depends on your property's current value and how much you still owe on the mortgage.
