You finally found your dream home.
Your finances are in order.
And best of all your offer has been accepted.
Buying a home is a monumental achievement. This is a major milestone that is filled with excitement and anticipation for the future. In fact, you can already imagine raising a family and building a future in the very home you made an offer on.
But there is still one final step left until you are a proud homeowner: Settlement.
Settlement is like the last stretch of a seemingly endless undertaking. Except this time the keys to your home are finally handed over to you and you can start moving your things in. But how exactly does the settlement process work and what does it entail?
Settlement can be confusing particularly for first home buyers. Here we put together some of the most commonly asked questions so you have a better idea of what to expect on the big day.
What is settlement?
Settlement is when the transfer of property becomes official. There are a number of steps that must be accomplished before this stage can be reached.
- Offer accepted: Perhaps the most important step is the initial offer to the seller who will either accept your offer, propose a counteroffer or refuse outright. If the offer is accepted, then valuations and approvals are needed.
- Property valuations: Valuations are done to assess the value of the property. Lenders require valuations to ensure the purchase meets all conditions before loan approval.
- Formal approval: This is when the lender provides confirmation that the loan application has been approved. Every individual has different financial circumstances so some approvals may take longer.
- Loan contract: The contract stipulates all conditions of the loan from the total amount borrowed to interest rates and more. Supporting documents may be needed to avoid any delays.
Settlement finalises the property transaction between the vendor and purchaser. Most contracts of sale typically state a settlement date 30 to 90 days from the day of the sale. On settlement day your conveyancer will meet with representatives from the lender and seller to sign and hand over documents.
Your lender will then authorise payment and register a mortgage against the property title. Adjustments are then made to account for any differences during the settlement period. Both parties put in writing that settlement has taken place.
After settlement is completed successfully, you can officially take ownership of your home. The whole process is often long and complicated which is why it is important to find the right settlement agent or conveyancer.