What is home loan settlement?

Settlement is the last step in getting a home loan and is the part of the process when your lender formally approves your mortgage and you purchase your home. 

The settlement process involves a few key steps, like getting a Certificate of Title, gaining access to the money from your home loan, and ensuring everything is in order from a legal standpoint.

Home loan settlement comes after you make an offer, pay the deposit, and sign the contract of sale.

The official settlement date and location are pre-negotiated with the property seller and confirmed both in writing and on the contract of sale. 

How long does settlement take? 

Your settlement date can come between 4-6 weeks after signing and exchanging the contract of sale.

These days, settlement can be done entirely online, and you typically won’t have to attend the settlement meeting. 

Your buyer's agent will even make sure that the final payment is made and lodge any paperwork with the land title registry to make you the new title deed owner.

Before you settle on your home, there are a few things you need to do: 

1. Hire a solicitor 

The first thing to do is make sure you have a conveyancer or solicitor to act on your behalf as an agent. 

This person will file paperwork, make the final purchase, help check the property, and advise you on any delays, legal catches, or compliance matters. 

2. Complete your final inspection  

Contact the real estate agent and arrange for your final inspection of the property. This inspection is your opportunity to double check everything is in order. 

In theory, the property should be in the same condition as it was when you signed the contract of sale.

When doing your final property inspection, make sure to check that:

• There’s been no significant damage to the property since signing the contract.
• All appliances, fittings, and other functions (such as plumbing) are working properly.
• All locks and garage doors are installed and working, including your keys.
• All furniture has been removed.
• Any rubbish or building materials have been removed.
• The house is reasonably clean.
• The property is free from pests.

If you find an issue during this inspection, you’ll need to let your conveyancer or solicitor know. This could also delay settlement day, which we cover in the FAQs at the end of this page.

3. Get home loan approval 

Another important task is making sure that your funds are in order and that your home loan is approved. Consider both the legal fees you need to pay and what monetary support you need. 

For example, you may need to arrange:

• Stamp duty. 
• Conveyancing fees.
• Lending fees, such as loan establishment fees or settlement fees. 
• Home insurance, effective from settlement day.
• Potential home loan grants and schemes you need to help with home loan or deposit costs.

4. Agree on a settlement date 

First, you need to sign and date the contract of sale with the settlement date, as agreed upon between you and the seller.

On settlement day, you officially take ownership of the property and hand over the rest of the purchase price. 

Your lender will organise the financial side of things, and the conveyancer or solicitor does all the legal and admin tasks for you, such as liaising with your mortgage lender and the vendor’s solicitor. 

Your lender must: 

• Add your home loan to the Certificate of Title.
• Release your home loan funds so you can pay for your new home. 

Your solicitor or conveyancer must confirm:

• The seller has been removed from the Certificate of Title.
• All contract of sale terms are met.
• No third party has rights over the property (known as a caveat).
• No ‘covenant’ exists that dictates how the land can be used or what can be built on it.
• No ‘easements’ exist that allow others to use the property (e.g. for access to roads or trails). 
• The land and mortgage transfer is registered with the land title office in your Australian state or territory.

Finally, the seller must: 

• Ensure that council rates, utilities, and/or strata fees are paid for, up to the settlement date. 

Once the legal and financial parts of the settlement are complete, you’re the official owner of the property and can start moving in.

As you’ve already paid a deposit and agreed upon a price for the property you’re buying, it’s pretty simple to calculate your home loan settlement amount. 

Simply take the final price of the property (e.g. $800,000) and subtract your home deposit (e.g. $160,000) to work out how much you need to draw from your home loan (e.g. $640,000). 

Learn more about the home buying process here, or compare home loans if you’re ready to start your search.