Property sales are the most significant transaction of most people's lives. Inevitably, that means there's a bit more to it than just handing over the keys in exchange for a suitcase full of money. While a contract of sale is legally binding, the seller typically will not receive their money for several weeks, usually on what's known as settlement day.
Property settlement process Australia
The contract of sale for a property transaction will specify a settlement day, which is usually when the buyer pays up. This is also when the keys are handed over and the buyer officially becomes the owner of the property. As a seller, settlement day is generally when you will receive the money, although there are some circumstances that can cause delays.
Settlement day is open to negotiation between the buyer and seller. About six weeks from when the contract is finalised is probably the most common settlement period, but it can be any length of time agreed upon by both parties. This delay allows for conveyancing and other documents needed to officially transfer ownership from seller to buyer.
Deposit payment
As a buyer, you generally need to pay the deposit first and then the rest of the money on settlement day. However, the deposit is then held in a trust until settlement day, so neither party can access it in the meantime.
Principal and interest (P&I) home loans
Below are some of the most competitive P&I home loan offerings in the market to help manage your deposit and other purchasing costs effectively.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.08% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 STAR CUSTOMER RATINGS |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
6.14% p.a. | 6.16% p.a. | $3,043 | Principal & Interest | Variable | $0 | $350 | 60% |
House settlement payment timeline
There are a few phases between agreeing on a buyer and getting your money on settlement day.
Contract of sale
Once you've agreed on a price, you or your representatives will draft a contract of sale. The contract will include the sale price, the size of the deposit and when it is paid, and the length of the settlement period.
Cooling off period
The cooling off period is the time between the agreement to buy and the time when the contract becomes binding. This allows buyers to do a deep dive into everything about the property, including pest and building inspections.
Once the period is up, the contract is deemed "unconditional" and becomes binding.
Each state has different laws about the duration of the cooling-off period. In some states, there is a mandatory cooling off period, while in others it is an optional clause of the bill of sale.
|
Cooling off period (business days) |
|
|---|---|
|
NSW |
5 days |
|
VIC |
3 days |
|
QLD |
5 days |
|
SA |
2 days |
|
WA |
None unless specified in the sale contract |
|
TAS |
3 days (not mandatory) |
|
NT |
4 days |
|
ACT |
5 days |
Settlement period
The settlement period is when most of the legal and financial details are finalised. Here's a brief overview of what normally happens during the settlement period:
-
The lender approves and releases the buyer's loan as payment for the property.
-
All of the conveyancing documents are prepared and lodged, either by the buyer or a solicitor acting on their behalf.
-
The vendor transfers the title to the buyer, and the buyer's bank or solicitor registers this change.
-
All parties make any necessary adjustments for costs incurred during the settlement period.
-
If you are selling a property with outstanding finance, you will need to contact your lender to arrange the discharge of your mortgage. In some cases, you may need to pay break costs for discharging the home loan early.
There's no set length of time for settlement, so its up for negotiation between the buyer and seller. In general, it will be between 30 and 90 days.
This is a rough guide for the general length of the settlement period in each state or territory, per the respective governments.
|
Estimated settlement period |
|
|---|---|
|
NSW |
6 weeks |
|
VIC |
30-90 days |
|
QLD |
4-6 weeks |
|
SA |
30-90 days |
|
WA |
30-90 days |
|
TAS |
30-90 days |
|
NT |
30-90 days |
|
ACT |
30-90 days |
Settlement day
On settlement day, the complete purchase price of the property is paid, and the seller usually receives the funds in their account. However, there might be a delay of a couple of days depending on bank processing times.
Real estate settlement payment
Settlement day is when the purchase price of the property is paid. For sellers, this usually means settlement day is when the funds will appear in your account, although in some cases there might end up being a couple of days delay.
What might delay payment?
All things going to plan, the money will appear in your account on settlement day, but there are several potential delays.
-
Finance issues. If the buyer was not approved for finance prior to the purchase, and then runs into problems getting the necessary home loan, this could mean you don't get your money on settlement day. Some contracts have a 'subject to finance' clause, which can void the sale if there are issues with finance. If there is no such clause though and the buyer can't pay up, you likely will have the right to keep the deposit, and might be able to take legal action in case of subsequent losses you incur.
-
Document issues. Mistakes in legal documents or discrepancies in the paperwork need to be corrected before the official transfer of ownership, potentially delaying the settlement.
-
Bank delays. Banks may delay releasing funds due to internal processing or issues found during the final property inspection.
-
Final inspections. New issues discovered during final inspections might prompt last-minute negotiations for repairs or compensation, leading to delays.
Collections: Refinance home loans
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