What is property settlement?
Property settlement is the legal process where ownership of a property transfers from seller to buyer. It's the final step in your home buying journey—the moment when all your paperwork, patience, and planning pays off with you becoming the official owner of your new home.
But there's a lot that happens between loan approval and getting your keys. For first-time buyers especially, this process can seem overwhelming with unfamiliar terms, unexpected costs, and numerous requirements to fulfill.
Let's break down the entire settlement process so you know exactly what to expect.
When to engage a conveyancer?
Unlike some other countries, in Australia, most home buyers work with a conveyancer or solicitor during the negotiation stage - before getting their offer accepted. This is a crucial distinction that can save you significant headaches later.
Pre-offer contract review
A conveyancer can review the contract of sale before you make an offer to:
- Identify unfavorable terms or conditions
- Suggest contract amendments or special conditions
- Uncover potential issues with the property title
- Advise on cooling-off periods and deposit requirements
- Explain stamp duty obligations
Pro tip: Engaging a conveyancer before making an offer can reveal deal-breakers early, potentially saving you thousands in property inspection costs for a problematic property.
The timeline between approval and settlement
Once your loan is formally approved, settlement typically takes 4-6 weeks, though this can vary depending on the specific conditions of your sale and loan. Here's what happens during that period if you've already engaged a conveyancer:
2. Verification of identity (VOI) (1-2 weeks after approval)
Your lender and settlement agent will require you to complete a verification of identity check. This is a legal requirement designed to prevent fraud and property theft.
What to prepare:
- Primary photo ID (passport or driver's license)
- Secondary ID (Medicare card, birth certificate)
- Proof of address (utility bills, council rates)
- Marriage certificate (if your name has changed)
3. Reviewing and signing loan documents (2-3 weeks after approval)
Your lender will prepare the formal loan documents for you to review and sign. This is a crucial step that finalises the terms of your mortgage.
What to expect:
- Loan agreement with all terms and conditions
- Mortgage documents
- Direct debit request forms
- Any special condition requirements
Important: Read every document carefully! If anything doesn't match what you discussed with your broker, raise it immediately.
4. Arranging building and home insurance (2-3 weeks before settlement)
Most lenders require proof of building insurance before settlement can proceed. This protects the property (which is their security) against damage.
Key requirements:
- Insurance must be effective from the settlement date
- The insured amount should cover the full replacement value
- Your lender must be noted on the policy as an interested party
5. Pre-settlement inspection (1 week before settlement)
This is your opportunity to verify the property is in the condition agreed upon in the contract. Schedule this with your real estate agent.
What to check:
- All fixtures and fittings included in the sale are present
- The property is in the same condition as when you agreed to buy it
- All appliances and systems are functional
- All seller possessions have been removed
6. Final loan checks and funding (3-5 days before settlement)
Your lender will conduct final checks to ensure all conditions have been met before releasing funds. This may include:
- Confirming all documents are signed correctly
- Verifying insurance is in place
- Checking any special conditions have been satisfied
- Preparing the settlement funds
7. Settlement day
On settlement day, representatives from all parties (your settlement agent, the seller's settlement agent, your lender, and the seller's lender if applicable) meet to exchange documents and funds. You don't need to attend personally.
What happens:
- Your lender provides the funds to purchase the property
- Your settlement agent ensures all documents are correct
- Ownership is officially transferred to you
- Government departments are notified of the change of ownership
Common settlement issues
It's not uncommmon for settlements to be delayed in Australia, particularly for new purchases. While there aren't always financial penalties for causing a settlement delay, there can be. Here are the common causes of delays to settlement periods.
Delays in document processing
- Context: Settlement teams are often processing tens of loans at a time - if you submit a document late, incomplete or incorrectly, your application will often go to the back of the queue.
- Prevention tip: Submit all requested documents promptly and ensure they're completed correctly the first time.
Missing items discovered during final inspection
- Context: If the vendor of the property agreed to make improvements to the property or remedy an issue that was not complete.
- Prevention tip: Be thorough during your initial property inspections and clearly document what's included in the sale.
Insurance issues
- Context: it is mandatory in Australia to have building insurance when you become the owner of a property. Your lender will not complete the financing of your home loan if you don't have insurance organised.
- Prevention tip: Arrange your insurance at least two weeks before settlement and send confirmation to your lender immediately.
Finance delays
- Context: when a lender gets in touch with requests for more information, signature requests or identity verification it's important to answer quickly. There will almost always be loan applications ahead of you in the queue, so you want to give your lender sufficient time to complete their processes.
- Prevention tip: Stay in regular contact with your broker and lender, responding quickly to any requests for additional information.
Why settlements get delayed
Settlement delays are common in Australia - understanding the potential causes can help you manage expectations and plan accordingly.
1. Lender-related delays (30-40% of delays)
Common causes:
- Last-minute requests for additional documentation
- Staff shortages during peak periods
- Systems issues or technical problems
- Incomplete or incorrect loan documentation
- Delays in valuation reports
- Funding issues on settlement day
Reality check: Even with pre-approval, lenders can sometimes take longer than expected to process final approvals. Allow a buffer of at least 5-7 days beyond your lender's estimated timeframe.
2. Conveyancer/legal delays (20-30% of delays)
Common causes:
- Incomplete searches or outstanding issues found in searches
- Title problems requiring resolution
- Mistakes in transfer documents
- Communication breakdowns between parties
- Lack of preparation for settlement day
- Overlooked special conditions in the contract
Reality check: Complex properties (particularly those with encumbrances, easements, or non-standard titles) often require extra time for proper legal review.
3. Seller-related delays (15-20% of delays)
Common causes:
- Seller not vacating the property on time
- Linked settlements (seller buying another property)
- Outstanding council or water rates
- Mortgage discharge delays from the seller's lender
- Last-minute negotiation issues
Reality check: Sellers facing their own settlement delays for their next purchase can create a domino effect, impacting your timeline.
4. Buyer-related delays (10-15% of delays)
Common causes:
- Delays in paying the deposit or balance funds
- Not arranging insurance in time
- Missing verification of identity appointments
- Failing to sign documents promptly
- Changes to loan requirements or borrower circumstances
Reality check: Even small oversights on your part can cause significant delays. Create a settlement checklist and review it weekly with your broker and conveyancer.
5. External/administrative delays (5-10% of delays)
Common causes:
- Bank payment system issues (particularly on busy end-of-month settlement days)
- State land registry processing backlogs
- Public holidays or unforeseen events
- PEXA (electronic settlement platform) technical issues
Reality check: Some delays are beyond anyone's control. Building flexibility into your moving plans can reduce stress if settlement is delayed by a day or two.
How to prepare for potential delays
Practical steps:
- Avoid setting your moving date exactly on settlement day; allow 1-2 days buffer
- Have contingency accommodation arranged if possible
- Keep communication channels open with all parties
- Ensure your broker and conveyancer have systems to track progress
- Have all your documentation organised and accessible
- Be responsive to requests for additional information
- Consider requesting a longer settlement period initially (60-90 days instead of 30-45)
Financial preparation:
- Budget for potential short-term accommodation if needed
- Understand potential penalty interest if you cause a delay
- Check if your contract has a grace period for settlement
- Keep some funds accessible for unexpected expenses
Post-settlement: Your first steps as a homeowner
1. Setting up your mortgage repayments
Ensure your direct debit or payment method is correctly established. Most lenders require your first payment approximately one month after settlement.
2. Updating your address
Create a checklist of all the places you need to update your address, including:
- Driver's license and vehicle registration
- Electoral roll
- Banking institutions
- Insurance providers
- Employer records
- Subscriptions and memberships
3. Planning for ongoing costs
Beyond your mortgage payments, budget for:
- Council rates
- Water rates
- Strata fees (if applicable)
- Home insurance
- Utilities
- Maintenance and repairs
The Australian conveyancer's role vs. your mortgage broker
What your conveyancer handles:
- Contract review before making an offer
- Property searches and title verification
- Document preparation for property transfer
- Calculation of adjustments (rates, taxes, etc.)
- Attendance at settlement on your behalf
- Lodgment of documents with land titles office
How your mortgage broker complements this process:
A good mortgage broker doesn't disappear after loan approval. We work alongside your conveyancer to:
- Liaise between you and the lender to resolve any issues
- Explain complex loan documents and conditions
- Recommend reputable conveyancers if you don't already have one
- Ensure all loan conditions are met on time
- Provide guidance throughout the entire settlement process
- Advocate for you if unexpected complications arise
- Coordinate timing between your lender and conveyancer
Final thoughts
The settlement process might seem complex, but with the right preparation and support, it can be navigated smoothly. By understanding each step and knowing what's expected of you, you can reduce stress and avoid delays.
Remember, your mortgage broker is there to guide you through every stage of your home buying journey—from initial application right through to getting the keys to your new home.
Need help navigating the settlement process? Contact our team of expert mortgage brokers today for personalised guidance on your home buying journey.
