What is Settlement?
The settlement period is when you'll deal with finances and paperwork to legally transfer ownership of property. Your financial and legal reps will usually handle the hard stuff, but knowing what's involved is key to a smooth property settlement. We're here to guide you through it.
If you’re refinancing from another lender, the process is a little different. You can read about refinance settlement in our refinance guide.
Before settlement – deciding the duration
You should have an idea on your ideal settlement length before your property sells. It can be completely up to you (outlined in the contract of sale from the get-go) or negotiated by you and the buyer before signing the contract.
It's all about you and the buyer meeting in the middle and feeling comfortable. You might choose a longer settlement period if you're still looking for another place. On the other hand, a buyer might want to move quickly to get in before key holiday periods like Christmas – especially if they're a family.
Two months is the most common duration in all states except New South Wales, where six weeks is the preferred time. Canstar has the lowdown on all typical settlement durations across Australia, opens in new window.
Leading up to settlement day – finances, formalities and moving
Sort out paperwork
Once the settlement period begins, your conveyancer will assemble a some forms for you to read and sign. 'Identification of encumbrances', 'Transfer of land', 'Stamp duty' – the list is pretty extensive.
To remove the mortgage on your home, use our checklist to help you complete our mortgage discharge authority form. It also allows your representatives to attend the settlement and hand over the title to the purchaser’s solicitor. The process can take up to 15 days to arrange with all parties and finalise. If there are any delays to the settlement, you might have to pay extra costs.
A few things your conveyancer will do
- go over the contract to make sure it's accurate and reasonable
- get the cheques ready and arrange for the lender’s representative to be present on settlement day
- make sure existing mortgages on the property are paid off
- make sure measurements or boundaries correspond with the 'Certificate of Title'.
Organise the final inspection
Your buyer will probably check out the house one final time during the settlement period. This typically happens in the week before settlement day and gets arranged by the seller's agent.
On top of getting things spick and span for the new owners, go the extra mile by leaving behind manuals for appliances, listing paint colours for the walls and trimmings and passing on any other tips to help keep the house as beautiful as you left it.
Lastly, seeing as you need to hand over the property in the same condition as when it was sold, make sure your home insurance is in place until settlement day. You don’t want to be caught out if any major home repairs are suddenly needed.
Want to feel confident on the finance and formalities front? Follow these key tips.
- Sort out additional costs: You’ll need to make other payments on the day unrelated to the sale price, like final conveyancing fees and council rates.
- Have a document-signing lock-in: Got a stack of forms to get through? Grab some takeout, put on some easy tunes and devote one night to getting them done.
- Tend to important admin: Redirect your mail, switch over utilities and change your billing address to keep your money moving with you.
Planning the move
You’ll have to vacate prior to settlement day unless another arrangement has been negotiated. Buyers are generally keen to get in the day after settlement, so you'll want everything ready to go the day before. This one-day buffer will give you just enough time to get things done without having to waste money on interim storage and accommodation.
For a (mostly) hassle-free move, follow these key tips.
- Give the removalists your floor plan and parking tips: This will help them unload everything in the right place, saving you the hassle later.
- Get ruthless with throwing things away: You probably should've done a declutter years ago, but it's never too late – and a move's the perfect opportunity.
- Have a surplus of packing supplies at the ready: A last-minute run to the shops for tape and boxes is only going to frustrate you and interrupt the moving flow.
- Label everything clearly and descriptively: Don't assume you'll remember where everything is. Utilise handy tips, like taping nails and screws to furniture.
- Pack an overnight (worst case scenario) bag: Chargers, laptops, toiletries – even a celebratory drink. Avoid being put out if you need to shack up elsewhere for a short time.
More than money – saying goodbye to your home
A lot of memories and love exist between the walls of your soon-to-be old home, so make sure you celebrate them before you move. Do your best to get the family together one last time. Reliving the best moments where they happened is a great way to feel at peace with moving on.
On settlement day
You're welcome to join in the fun, but you don't actually have to be present on settlement day. A lot of the time, it's simply a meeting between each party's conveyancer and representatives from the lenders (usually a bank).
What goes down
- The buyer's mortgage comes into effect and the lender pays the remaining balance of the house price to the seller.
- The buyer's conveyancer officially receives the property title and registers them as the new owner.
- Cheques are exchanged and the seller can claim the deposit from their agent. You can then park your deposit in an account that’ll help your money grow. Take a look at our iSaver account and get the low-down on offset accounts.
- Any outstanding paperwork and payments (like stamp duty and council rates) are signed and sorted.
- Loose ends are tied up, the keys are handed over and everyone breathes a well-earned sigh of relief.
What happens if it doesn’t all go to plan?
With enough prep, any given settlement will go off without a hitch most of the time. But that doesn’t mean things can’t go wrong.
Make sure you go over the following scenarios with your conveyancer and what they’ll do if:
- the seller’s mortgage isn’t discharged in time
- the buyer’s lender doesn’t approve their home loan in time
- the buyer refuses to settle after the final inspection.
The most important thing is to stay positive. A good conveyancer will take it on themselves to do everything they can to make the settlement go ahead smoothly and quickly.
For the brave ones, 'dual settlement' takes place when you sell, buy and have the settlement for both houses on the same day. It might seem like an organisational nightmare (and frankly, it can be), but with enough groundwork, it's doable.
You'll effectively have two settlements to coordinate, so there's a lot more to align. Make sure you've locked in a few things, like a more leisurely settlement period and a detailed moving schedule for your removalists. As always, run it past your agent and conveyancer first. A dual settlement's a great way to save on potential rent, storage and double mortgage costs, but it can be a headache.
Want to know more? Read our article about the settlement process when buying a home.
Ready to purchase your home? Talk to our home loan experts today.
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