Property Settlement Process

Congratulations! You have purchased a property at auction! Now what?

Generally, immediately after the hammer comes down and the crowd has clapped politely, the buyer and seller are required to sign and exchange copies of the contract of sale and the buyer is required to pay a deposit (usually 10% of the purchase price). The settlement date is agreed upon (listed in the contract of sale) and the settlement period begins (the length of this period varies depending on the vendor and which state the property is in, but it is usually between 30 and 90 days, or 4 to 6 weeks).

Your conveyancer or solicitor will most likely recommend arranging building insurance once you have signed the contract of sale, and it is also a requirement of most lenders. Building insurance is used to help cover the cost of replacing your property in the event that it is destroyed, or to help pay for damage repairs if the physical structure of your property is ever affected. Prior to settlement, you are also able conduct a final inspection of the property to ensure that it is in the same condition as it was on the day it was sold.

A few weeks before the settlement period ends, be sure to chat with your mortgage broker and conveyancer about how much of your own money is needed on settlement day (less deposit, less loan, plus adjustments such as stamp duty, rates, water, and body corporate fees). It is important to ensure that you have sufficient funds available so that settlement doesn’t fall over. Also make sure that you understand how these funds will be transferred (e.g., from a conveyancer’s trust account, or from a bank account associated with your chosen lender). Your mortgage broker can help you to organise all of this so that everything runs smoothly on the big day.

It is also a good idea to ask your broker about loan repayments and how and when they need to be made, so that you can start budgeting for the future. Also be sure to book in a home loan review for 12 months’ time, so that a year down the track you can assess whether or not the home loan you have is still the right product for you.

On settlement day, legal representatives (conveyancers or solicitors) usually finalise the sale on behalf of the buyer and seller. They arrange for the balance of the purchase price to be paid to the seller (usually via a home loan) and the buyer’s legal team ensures that the required property taxes, land transfer duty and rates are also paid. Once the relevant paperwork has been completed and lodged with the titles office and the change of ownership is finalised, the keys are then handed over to the new owner of the property. Cue the champagne!

Our team of finance specialists can guide you through the settlement process step by step and answer any questions you may have. We are here to help make the purchase of your new property as smooth as possible!

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This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the article is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).

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