Buying your first home is an exciting step in life. Understanding the settlement process is critical to ensuring you don’t run into trouble at the final hurdle. It is surprisingly common to find unexpected last minute financial, legal or logistical challenges arise. Following are some things to know that will help you avoid these problems.

 

What is settlement?

It is a bit more than you might think. Of course it is the process of money changing hands, which in itself can be complicated given the number of people involved. For example, the vendor’s bank, the buyer's bank, the mortgage broker, the legal advisors and so on. Settlement is also the process of actually legally assigning the property from seller to buyer and collecting and lodging all related documents and paperwork.

 

When does settlement take place?

Settlement will take place on a date and time that is agreed by all parties at the start of the process. In most Australian states and territories the usual period for settlement is 30, 60 or 90 days after the vendor accepts the buyer's offer to purchase. In most instances the buyer and seller will agree through the representing agent on the settlement terms but remember, if you are buying at auction the settlement period will most likely already be fixed so always check the settlement terms before auction day.

 

What needs to be ready for settlement?

Money

Keeping in mind that your lender will need some time to process a full application and get you to unconditional approval. Up to this point you will likely only have approval in principle, which is fairly quick process. Obtaining unconditional approval takes quite a bit more information. Your broker will help guide you through this and will be able to give you an estimate of the timeframe your chosen lender is likely to take.

Legal stuff

You’ll need a property conveyance specialist to ensure that all legal documents and title searches are done in preparation for the settlement day. The conveyancer and your mortgage broker will work together to ensure that your loan funds will be ready to draw down on the designated day and that all other funds are ready to go. Remember this includes the balance of deposit (after the deposit you paid to secure the deal), borrowed funds, stamp duty as well as bank fees and adjustment payments for rates and utilities where applicable. It is also important to remember to have insurance in place from the settlement day.

Final inspection

Make sure to schedule a final inspection to avoid in unpleasant experiences after taking possession. This is common practice and the real estate agent will be happy to organise it for you.

So now you know a bit more about what to expect on settlement day, you are ready to get out there and look for the property of your dreams.