What happens at settlement when you buy a house

Settlement is the legal process where your lender pays the seller and you receive the keys.

It typically happens 30 to 90 days after you sign the contract of sale, though the exact date is negotiated when you make your offer. Your conveyancer or solicitor handles most of the work, but understanding what happens behind the scenes helps you prepare financially and practically for ownership.

Your Home Loan Comes Into Effect

Your lender releases the loan amount to your solicitor on settlement day, and your repayment obligations begin from that point. Until settlement, you're typically making repayments on any existing mortgage or rent, not the new property.

Consider a buyer who secured home loan pre-approval for a $650,000 property in Sydenham three months before finding the right place. Between pre-approval and settlement, interest rates shifted, but their fixed rate lock protected them from the increase. On settlement day, their lender transferred $520,000 (the loan amount after their 20% deposit) to the seller's solicitor. Their first mortgage repayment was due exactly one month from settlement date, not from contract signing. The timing caught them off guard initially, but their broker had walked them through the timeline during pre-approval, so they'd kept funds aside for both the deposit and first month's holding costs.

The Money Transfer Happens in Stages

Your solicitor receives funds from your lender and any additional deposit you're contributing, then pays the seller and settles any outstanding amounts. This includes adjustments for council rates, water rates, and sometimes strata fees if you're buying a unit.

In Sydenham, where many properties are older homes with established gardens, water usage adjustments are common. The seller typically pays up to settlement day, and you're responsible from that point forward. Your solicitor calculates these pro-rata amounts based on the most recent bills and includes them in the final settlement statement. You'll also see adjustments for council rates, which in the Inner West Council area are billed quarterly. If the seller has already paid rates covering a period after settlement, you reimburse them for your portion.

When You Actually Get the Keys

You receive the keys once settlement completes and your solicitor confirms the transfer has been registered. The timing depends on when your lender releases funds, which is usually between 12pm and 2pm on settlement day.

Most agents in the Sydenham area arrange key collection at their office, though some will meet you at the property. Your solicitor contacts you once they've confirmed settlement with the seller's solicitor and the agent releases the keys. If you're buying an owner occupied home loan, you can move in immediately. If settlement happens late in the afternoon, some buyers prefer to do a final inspection the next morning rather than rush a move that evening.

Your Offset Account Starts Working

Any funds in a linked offset account reduce the interest charged from day one of settlement. The more you hold in offset, the less interest accrues on your loan amount.

If you've structured your loan with an offset account, moving your savings across before settlement day means you're not paying interest on that portion of the loan from the first day of ownership. On a $520,000 variable rate loan, keeping $50,000 in offset means you only pay interest on $470,000. Over the first year alone at current variable rates, that saves you thousands in interest charges. The key is having those funds ready to transfer on or before settlement, not weeks later. Some buyers use the period between contract signing and settlement to consolidate savings specifically for this purpose, maximising the offset benefit from day one.

Insurance Must Be Active by Settlement

You need building and contents insurance in place from settlement day because you assume all risk once ownership transfers. Most lenders require proof of building insurance before they'll release funds.

Your solicitor will ask for insurance details a week or so before settlement. For properties in Sydenham, particularly the older brick homes common near Sydenham Station and along Railway Parade, insurers sometimes require additional information about the building's age and condition. Getting quotes early avoids last-minute delays. The policy must show coverage starting on settlement date, not the day after. If settlement is unexpectedly delayed by a day or two (which occasionally happens), you'll need to adjust the policy start date to match.

What Happens If Settlement Doesn't Go Ahead

If your lender doesn't release funds or the seller can't complete, settlement is delayed and penalty interest may apply. The contract usually specifies a daily penalty rate that the delaying party pays to the other.

Delays are rare when you've worked with a broker who's confirmed your home loan application is unconditionally approved and the lender has issued final documents. Most delays happen on the seller's side, such as when they're buying another property and that settlement falls through. If you cause the delay by not having funds ready or your loan approval lapses, you're liable for penalty interest at the rate specified in your contract, typically around 10% per annum calculated daily. Your deposit could also be at risk if you can't complete settlement within the extension period.

The Legal Transfer Completes

Your solicitor lodges the transfer documents with the Land Registry, and you become the registered owner once processing completes. This usually happens within a few days of settlement, though you own the property from settlement day itself.

The difference matters for rates and insurance purposes. You're legally responsible from settlement day, but the paperwork showing you as the registered proprietor arrives later. Your solicitor provides a settlement statement showing all funds transferred, adjustments made, and costs paid. This document is your record of the transaction and important for tax purposes if you later claim deductions or calculate capital gains when selling.

Call one of our team or book an appointment at a time that works for you to discuss your settlement timeline and ensure your loan structure is ready for day one of ownership.

Frequently Asked Questions