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The home loan settlement process


What actually happens at settlement?

You’ve bought your first home (congratulations!), and you’re aching to get in there. But what’s this mysterious ‘settlement period’ you need to navigate first?

You might be having a low-key freak out, not knowing whether things are moving forward, and feeling like you could be doing more. But if you’re prepared, you can get on with picking out paint swatches instead of worrying about where you are in the process.

What is the settlement period?

This is the time between “yes, I just bought a home”, and the day you have the keys in your hands. In other words, the time between the Contract of Sale being signed, and settlement day (the day you pay the balance of the sale price to the vendor, and legally take possession of the property).

It can take anywhere from 4 weeks (most common timeframe) to 4 months (in some cases) to comfortably sort out your paperwork and finances. The settlement period will be negotiated between yourself and the seller, via your solicitor or conveyancer.

What happens during settlement?

Depending on what state or territory you’re in, you’ll need a licensed solicitor or conveyancer, who will co-pilot the process with you.

During settlement, they will:

  • Prepare all necessary documents for you to review and sign, including the Transfer of Land
  • Review the Contract of Sale
  • Conduct a Certificate of Title search on the property
  • Arrange the day, time and place of settlement (usually negotiated with the vendor’s representatives)
  • Ensure any existing debts (such as council rates, water rates or land tax) have been (or will be) paid by the vendor
  • Provide you with a settlement adjustment statement. This could include adjustments to the balance owed including stamp duty, the First Home Buyers Grant if relevant, or compensation for the seller (council rates, body corporate fees).

Pro tip: Be meticulous with paperwork. Make sure everything that requires a signature or a tick is accounted for, and completed correctly (mistakes could add extra delays to settlement).

If you’re purchasing with bank finance, there are also a couple of specific steps to do with your lender.

  • Advise your bank that a Contract of Sale has been signed on a property, and that you’d like to move forward with finance approval and settlement
  • Your bank’s solicitor will contact your solicitor or conveyancer with details on what documents they require for settlement
  • You and your solicitor or conveyancer will review and sign the documents before sending back to your bank’s solicitor
  • The documents are Quality Checked, and if there are no issues your bank will liaise with both your and the vendor’s solicitors or conveyancers to go through payment details.

This all leads to settlement day. You don’t actually have to be there for this – settlement can be left to your solicitor or conveyancer.

The balance is handed over to the vendor in exchange for the Transfer of Land, Title Deed and Discharge of Mortgage. And that’s it! Take a spin in your new living room – it’s all yours.

What can I do?

While it’s easy to get nervous during this stage, there are some easy ways to maintain control.

  • Regular calls/emails with your solicitor or conveyancer to ensure everything is on track, all paperwork is signed from your end, and you’re made aware of any delays
  • Do a thorough final inspection a week or so prior to settlement day, to ensure the house is in the same condition as when it was sold
  • Arrange building and contents insurance for your soon-to-be new property from the day of settlement, as well as electricity, gas, phone and internet

Pro tip: Give yourself a buffer between settlement day and moving in. You don’t want your furniture arriving if an unexpected delay means you can’t take possession of the house that day.

The information contained in this article is of a general nature only. It doesn’t take account of any person’s objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate for your circumstances and seek independent legal, financial, and taxation advice.