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It almost seems too good to be true, but you’re finally approaching the end of the homebuying process; after months of dealing with your bank and inspecting houses, your home loan’s been approved and your offer on a house has been accepted.

There’s just one step left to complete, which is called settlement. Settlement can be a lengthy process, but the good news is that once it’s done, you’re done!

So, to make sure you’re ready for the settlement process and for settlement day, let’s go over how it all works and what you’ll need to keep in mind throughout.

What is property settlement?

The term ‘property settlement’ refers to both the process of transferring legal ownership of a property from its seller to its buyer, and the stipulated period of time in which this process occurs. It’s also the final stage of the homebuying process.

This means you’ll reach the settlement period after you’ve successfully navigated the home loan process, made an offer on a property and signed a contract of sale.

While settlement day could potentially only take up a few hours of your life, the broader settlement period will typically be much longer than that.

How long does settlement take?

Settlement can be a lengthy process, typically taking 30-90 days all up. However, the specific length of your settlement period will be influenced by:

  • The state or territory you live in. Different parts of Australia have different average property transaction timeframes.
  • The complexity of the property transaction. For example, buying off the plan will generally require a lengthier settlement period than a conventional property purchase.
  • The settlement period length desired by you and the seller. At the end of the day, you and the seller will likely get a say on the length of the settlement period.

You and the seller will generally be able to negotiate a longer or shorter settlement period, but don’t decide on too short a settlement period – lenders and the involved conveyancers have a lot of work to do during this period and need enough time to do it.

Otherwise, you could risk the whole transaction falling through on settlement day due to ill-preparedness or a paperwork error.

signing documents on settlement day

What happens on settlement day?

Settlement day is when all the loose ends finally get tied up. It’s also when your home loan’s funds are paid to the seller, and the documents to transfer official ownership of the property to your name are handed over.

The involved parties (i.e. you, the seller, your respective solicitors and/or conveyancers and the lender) will typically complete this together at an agreed date and time – usually in-person, but sometimes digitally.

That being said, you don’t necessarily need to attend yourself; your conveyancer or solicitor can represent you and act on your behalf during the settlement day proceedings.

During this meeting, you or your representatives will generally have to:

  • Transfer the funds necessary to purchase the house
  • Sign and exchange the final pieces of documentation with the seller and their representatives
  • Register the transfer of ownership with the relevant state or territory government
  • Pay any applicable stamp duty on the transaction (if you live in a state or territory where stamp duty is payable on settlement day).

Once this is all done, settlement will be finalised, and you’ll get the keys to your new home!

How to prepare for settlement day

Preparation is absolutely essential for settlement day. You and your conveyancer and/or solicitor should ideally be in regular contact during the process to make sure you’re dotting your i’s and crossing your t’s.

However, settlement day preparation isn’t just about paperwork  – you’ll typically have a whole slew of more mundane considerations to take care of, including:

  • Taking out a home and contents insurance policy (if this hasn’t already been taken care of)
  • Getting your utilities sorted, like energy, internet and potentially gas
  • If needed, arranging for a final, pre-settlement inspection of the property to make sure it’s in the same condition as it was when you signed the contract of sale
  • Packing and booking the movers for the big day.

If you can handle all of that, you should be on track for an issue-free settlement day!

Frequently asked questions

What if I need to delay settlement day?

Delayed settlement can occur if neither party is able to meet the settlement date. This could happen for several reasons; for example, the funds necessary to complete the transaction haven’t arrived yet, or there’s an error or delay with a necessary piece of paperwork on either party’s end.

Some states and territories have grace periods of varying lengths within which the settlement can be delayed without either party incurring a penalty. However, some places have no such grace periods, so be sure to check with your state or territory’s government revenue office or on its website.

If settlement is delayed so long as to incur a penalty, the terms of this penalty will be stipulated in the contract of sale that has been signed by both parties. Penalties can range from an interest charge to the loss of your upfront deposit and a termination of the contract.

In the event of a late or delayed settlement, the buyer and seller may be able to negotiate a new future settlement date.

You can’t prevent the other party from potentially making mistakes, but you can do your part by ensuring that you’ve done everything necessary and have all the appropriate resources on hand to facilitate a problem-free settlement day.

Can I move in straight away after settlement?

Technically yes, you can move in as soon as final settlement is concluded and you’ve collected the keys. Whether you’ll want to do this may vary depending on whether or not you’re ready to move in and if your utilities are connected. But in the eyes of the law, you’re now the owner of the property and can do as you please!

Can I inspect the house before settlement day?

Yes, you’re allowed to inspect the property before settlement day. In fact, you’re generally encouraged to do so as part of your due diligence as a buyer. A final inspection lets you make sure the property is in the same condition as it was when you agreed to buy it.

What can go wrong on settlement day?

Things that can go wrong on settlement day typically fall into one of two categories: money problems and documentation problems. Some potential settlement day issues include:

  • The funds necessary to buy the property not having arrived yet
  • Documentation has been prepared incorrectly
  • One party is missing or hasn’t finalised all the necessary documentation
  • The buyer not having insured the property yet (banks generally won’t let the loan be drawn down on until this has happened)

The best way of preventing these issues from popping up is simply by being prepared and having your documentation and financial matters sorted well in advance of settlement day.

Do I need to insure my new home before settlement day?

Yes, lenders will generally refuse to let a buyer finalise the settlement process until they’ve insured the property in question. A buyer can legally take out a home and contents insurance policy for a property they’re buying once they’ve signed the contract of sale.

As this happens well before settlement day, you should generally seek to insure the property you’re buying as soon as possible after signing the contract of sale.

Make sure you’ve compared home loans

If you’re gearing up to buy a home, make sure you’ve chosen a good-value home loan! Our home loan comparison tool can help you compare a wide range of home loans from a variety of different lenders and can guide you through the application process from start to finish.

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