Settlement

Settlement is the final step in purchasing a property or asset where ownership legally transfers from seller to buyer, the loan is finalized, and all funds are exchanged. It's the day you officially become the owner and receive the keys.

What Happens at Settlement

For Property Purchases

Key events:

• Your lender releases loan funds to the seller's bank
• You transfer your deposit + any additional cash required
• Seller's mortgage is paid out (if applicable)
• Legal ownership transfers to you
• Title is registered in your name
• You receive the keys

Who's involved:

• Your solicitor/conveyancer
• Seller's solicitor/conveyancer
• Your lender
• Seller's lender (if they have a mortgage)
• State land registry office

Example timeline:

• 10:00 AM: Solicitors confirm all documents signed
• 10:30 AM: Your lender releases $520,000 to seller
• 10:30 AM: You transfer $80,000 deposit balance
• 11:00 AM: Seller's bank receives $600,000, pays out their $350,000 mortgage
• 11:00 AM: Seller receives $250,000 net proceeds
• 11:30 AM: Ownership registered in your name
• 12:00 PM: Agent releases keys to you

You don't need to attend—your solicitor handles everything.

Settlement Timeline

Typical Timeline: 30-90 Days from Contract

Why the delay?

• Time for finance approval (if not pre-approved)
• Property inspections (building, pest)
• Title searches
• Contract cooling-off period (in some states)
• Seller needs time to move out

Example 60-day settlement:

• Day 1: Sign contract of sale
• Day 14: Building/pest inspection complete
• Day 21: Finance unconditionally approved
• Day 45: Final walk-through inspection
• Day 60: Settlement day

Faster Settlement (14-30 Days)

Possible if:

• You have pre-approval
• Paying cash (no loan)
• Seller is ready to move immediately
• Property is vacant

Example:

• Auction property: Contract signed on the spot
• Pre-approved buyer: Finance already assessed
• Vacant property: Seller has already moved
• Settlement: 14 days (vs typical 60 days)

Advantage for buyers:

• More attractive to sellers (certainty, speed)
• May negotiate lower price (seller values quick settlement)

Example negotiation:

• Property listed: $750,000
• Standard offer: $750,000, 60-day settlement
• Your offer: $740,000, 21-day settlement (pre-approved)
• Seller accepts your offer (values speed over $10K)

Longer Settlement (90+ Days)

Common for:

• New builds/off-the-plan (settle when construction complete)
• Buyers needing time to sell existing property
• Complex finance (commercial, development loans)

Example—new build:

• Sign contract: January 2025 (property under construction)
• Estimated completion: July 2025
• Settlement: August 2025 (6-7 months)

Settlement Costs

Typical Costs for Buyers

Stamp duty (biggest cost):

• Varies by state and property value
• Example (NSW): $650,000 property = ~$25,000 stamp duty
• First home buyers: Concessions or exemptions available

Solicitor/conveyancer fees:

• Range: $1,200-$2,500
• Average: $1,800

Lender fees:

• Application fee: $0-$800
• Valuation fee: $0-$400 (often waived)
• Settlement fee: $0-$300

Government fees:

• Title transfer: $150-$300
• Mortgage registration: $100-$200

Inspections:

• Building inspection: $400-$600
• Pest inspection: $200-$400
• Strata report (apartments): $200-$350

LMI (if LVR > 80%):

• Example: 90% LVR on $600K property = ~$18,000 LMI
• Usually capitalized into loan (don't pay upfront)

Total typical costs (excluding stamp duty):

• Owner-occupier (80% LVR): $3,000-$5,000
• First home buyer (90% LVR): $20,000-$25,000 (includes LMI)

Example: $650,000 Property Purchase (NSW)

Purchase price: $650,000 Deposit (10%): $65,000 Loan amount: $585,000 (90% LVR)

Settlement costs:

• Stamp duty: $26,000 (NSW rate for owner-occupier)
• Solicitor: $1,800
• Lender fees: $600
• Inspections: $1,000
• Government fees: $400
• LMI: $19,500 (added to loan)
• Total upfront costs: $29,800 (excludes LMI)

Total cash needed:

• Deposit: $65,000
• Settlement costs: $29,800
• Total: $94,800

Loan amount:

• Principal: $585,000
• LMI: $19,500
• Total loan: $604,500

Settlement Day Checklist

1-2 Weeks Before Settlement

Your solicitor will:

• Conduct final title search (ensure no new encumbrances)
• Prepare settlement statement (breakdown of costs)
• Confirm funds required from you
• Request loan funds from lender

You should:

• Arrange final funds transfer to solicitor's trust account
• Book final property inspection (day before settlement)
• Arrange building/contents insurance (must be active by settlement)
• Confirm moving arrangements

Example:

• Settlement date: Friday, March 15
• March 8: Solicitor sends settlement statement
• March 10: Transfer $80,000 to solicitor's trust account
• March 14: Final inspection (ensure property in agreed condition)
• March 14: Building insurance active from March 15
• March 15: Settlement occurs

Day Before Settlement

Final property inspection:

• Confirm property in same condition as contract
• Check agreed inclusions (appliances, fixtures)
• Ensure property is vacant (if agreed)
• Note any issues immediately

Example issues found:

• Hot water system broken (wasn't broken at contract signing)
• Seller removed light fittings (they were included in sale)
• Solicitor negotiates: Seller pays $2,000 credit at settlement

Settlement Day

Morning:

• Solicitors confirm all documents ready
• Lender releases funds to your solicitor
• You've already transferred your portion of funds

Midday (typical settlement time):

• Funds exchanged electronically
• Documents lodged with land registry
• Title registered in your name

Afternoon:

• Agent notified settlement complete
• Keys released to you
• You take possession

Example:

• 9:00 AM: Your solicitor confirms $520,000 loan funds received from lender
• 9:15 AM: Your solicitor has your $80,000 deposit
• 11:30 AM: Settlement conference (electronic)
• 11:35 AM: Funds transferred to seller
• 12:00 PM: Ownership registered
• 12:30 PM: Agent emails you: "Settlement confirmed, collect keys"
• 1:00 PM: You pick up keys and move in

Settlement Delays and Issues

Common Causes of Delay

1. Finance not approved on time Problem: Loan assessment takes longer than expected.

Example:

• Settlement date: April 30
• Finance approval: May 2 (2 days late)
• Delay: 2 days, reschedule settlement to May 4

Solution: Get pre-approval and allow buffer (don't cut it close).

2. Property valuation issues Problem: Lender values property lower than purchase price.

Example:

• Purchase price: $700,000
• Lender valuation: $670,000
• Loan approved: 90% of $670K = $603,000 (not $630,000)
• Shortfall: $27,000 (you need extra cash)

Solution: Negotiate with seller to lower price, or find extra deposit.

3. Building inspection reveals major defects Problem: Serious issues found pre-settlement.

Example:

• Building inspection: $80,000 structural repairs needed
• You exercise contract clause: Request seller repair or reduce price by $80K
• Seller refuses
• You withdraw from contract (within cooling-off period)

4. Title issues Problem: Unexpected encumbrances on title (easements, caveats).

Example:

• Title search reveals: $50,000 unpaid council rates (seller's debt)
• Settlement delayed until seller pays debt
• Your solicitor ensures rates are paid from settlement proceeds

5. Seller not ready to move Problem: Seller's new property settlement delayed.

Example:

• Your settlement: June 15
• Seller's new property settlement: June 20 (delayed from June 10)
• Seller requests delay to June 22
• You agree (extend settlement)

If you don't agree:

• Seller must vacate by June 15 (contract obligation)
• Seller may rent short-term accommodation
• Or pay you penalty (e.g., $500/day for late possession)

What Happens If Settlement Falls Through

Buyer Fails to Settle

Reasons:

• Finance falls through
• Can't come up with deposit
• Change of mind

Consequences:

• Lose your deposit (typically 10% of purchase price)
• Seller may sue for additional losses
• Vendor keeps property and re-lists

Example:

• Purchase price: $800,000
• Deposit paid: $80,000
• Finance falls through (you lost your job)
• You lose $80,000 deposit
• Seller re-lists property, sells for $750,000
• Seller may sue you for $50,000 loss (plus costs)

How to avoid:

• Get pre-approval before making offers
• Include finance clause in contract (gives you out if finance declines)
• Don't change jobs or take on debt before settlement

Seller Fails to Settle

Reasons:

• Can't vacant property on time
• Seller's purchase falls through
• Change of mind

Consequences:

• Buyer can sue for specific performance (force sale)
• Buyer may claim damages (e.g., hotel costs if made homeless)
• Buyer may terminate and recover deposit plus damages

Example:

• Settlement date: July 1
• Seller doesn't settle (their purchase delayed)
• You've sold your home, now homeless
• Seller pays: Your hotel costs ($300/night for 2 weeks = $4,200)
• Settlement rescheduled to July 15

Settlement for Different Purchase Types

House/Unit Purchase (Standard)

Timeline: 30-60 days Complexity: Moderate Costs: $3,000-$5,000 + stamp duty

Off-the-Plan/New Build

Timeline: 6-24 months (when construction complete) Complexity: Higher (sunset clauses, construction delays) Costs: Similar to standard, but deposit paid in stages

Example:

• Sign contract: January 2024
• Pay 10% deposit: $70,000
• Construction: 18 months
• Expected completion: July 2025
• Actual completion: September 2025 (2 months late)
• Settlement: October 2025

Risk: Property value may have changed by settlement.

• Bought off-plan: $700,000
• Market rises: Property now worth $850,000 (good for you)
• Market falls: Property now worth $600,000 (bad—you're overpaying)

Vacant Land

Timeline: 30-60 days (typically faster) Complexity: Lower (no building inspection needed) Costs: Lower (no LMI if building home, special construction loan)

Example:

• Purchase land: $300,000
• Settlement: 30 days
• Then apply for construction loan: $500,000
• Build home over 12 months

Commercial Property

Timeline: 60-90 days Complexity: Higher (due diligence, lease reviews) Costs: Higher (larger properties, commercial loan fees)

Example:

• Commercial property: $1.8M
• Deposit (30%): $540,000
• Loan: $1.26M
• Settlement: 90 days (time for tenant lease reviews, environmental checks)

Settlement for Refinancing

Refinancing settlement is simpler:

• No property transfer (you already own it)
• New lender pays out old lender
• Solicitor not usually required (unless complex)

Timeline:

• Approval: Day 1
• Settlement: 14-30 days later

What happens:

• New lender releases funds
• Old lender receives payout
• Old loan closed
• New loan begins
• You receive any equity release funds

Example:

• Refinancing $450,000 loan
• Accessing $100,000 equity
• Settlement day: New lender pays old lender $450,000
• New lender deposits $100,000 to your account
• New loan balance: $550,000

Post-Settlement Tasks

Immediately After Settlement

1. Collect keys 2. Change locks (you don't know who has copies) 3. Update utilities:

• Electricity
• Gas
• Water
• Internet

4. Update addresses:

• Driver's license
• Electoral roll
• Banks
• Employer

5. Keep documents:

• Contract of sale
• Settlement statement
• Title deed (digital in most states)
• Loan documents

First Few Weeks

1. Confirm loan repayments start

• First payment usually due 1 month after settlement
• Set up automatic payments

2. Check property tax/council rates

• Rates adjusted at settlement (you pay from settlement date)
• Ensure direct debit set up

3. Consider renovations (if planned)

• Now that you own it, you can make changes
• May need permits for structural changes

4. Review insurance coverage

• Ensure building/contents insurance adequate
• Consider income protection insurance (to cover mortgage if you can't work)

Final Thoughts

Settlement is the finish line of your property purchase:

• Happens 30-90 days after contract signing
• You don't attend—solicitor handles everything
• Costs $3,000-$30,000 (including stamp duty)
• Ownership transfers legally and you get keys

To ensure smooth settlement:

• Get pre-approval before making offers
• Use an experienced solicitor/conveyancer
• Budget for settlement costs (not just deposit)
• Arrange insurance before settlement
• Don't change jobs or take on debt before settlement
• Do final inspection day before settlement

Common costs people forget:

• Stamp duty (biggest cost—budget $25,000-$50,000 for $600K-$1M property in NSW)
• Inspections ($1,000-$1,500)
• Solicitor fees ($1,500-$2,500)
• Moving costs ($500-$2,000)

Work with a NIK Finance broker to:

• Get pre-approval (know your budget)
• Find best loan rates (save thousands)
• Coordinate with solicitors (smooth process)
• Ensure settlement happens on time

Settlement is exciting—it's the day you officially become a homeowner. With proper preparation and professional help, it's a straightforward process that marks the beginning of your property ownership journey.