What happens after I apply for a home loan?

Once your home loan application is approved, you need to prepare for the exchange of contracts and settlement day.

If you’ve been granted approval for your home loan application, you need to familiarise yourself with your rights as a buyer to ensure that everything is in order for settlement.

home loan settlementFrom speaking to the experts, including a solicitor or a conveyancer, reviewing the contract of sale, organising pre-purchase inspections and ensuring that you have the funds to settle the transaction, there’s plenty that borrowers need to think about in the lead up to settlement day.

How can I protect myself?

Before settlement, it's important that you understand your legal rights as a buyer and that you take steps to protect yourself.

For instance, the contract of sale should include contingencies that identify how you and the other party are legally obligated under the contract if certain events occur. For instance, you could include a term to have the contract subject to the outcome of a building inspection which would be categorised under a “subject to” clause.

Here are some other ways to protect yourself:

  • Legal advice. Get a copy of the contract of sale and ask a solicitor, conveyancer or property law specialist to ensure that all relevant clauses, such as the cooling-off clause, are in accordance with state legislation. If there’s anything in the contract that you don’t understand, ask a solicitor to interpret it for you so that you fully understand your obligations.
  • Inspections. During the cooling-off period, you should organise pre-purchase inspections, such as a pest and building inspection, to ensure that the property does not have any structural or other defects that may cause problems in the future.
  • Due diligence. Keep in mind that the vendor is not obligated to sell to any specific person and they are free to change their mind about the sale at any point before the exchange of contracts. Ask the agent for a written agreement that they will notify you if another offer has been made on the property as this will give you the chance to make a counter-offer.
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The exchange of contracts

When you sign the contract of sale, you’ll agree on the settlement date which is typically six weeks after the exchange date. The exchange of contracts signifies that both interested parties are committed to going ahead with the transaction.

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How can I get ready for settlement?

Once the contracts are exchanged, there are several ways that you can get ready for settlement:

  • Available funds. Ensure that you have funds available for stamp duty (this will be due at settlement) and make sure you have enough funds for the balance of the purchase price to avoid any delays.
  • Home and contents insurance. Organise building and contents insurance for the property as this is something your lender will request to see.
  • Contact utility providers. Speak to your utility providers to organise the disconnection and connection of services so that you have running services from the day you get the keys. As a rule of thumb, you should organise for the connection of electricity and gas five days prior to moving into your new property. Check out our guide about setting up your internet, phone and home utility services and relocating your broadband.
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What happens on settlement day?

At settlement, you’ll need to pay the balance of the property price plus any funds that you owe to the vendor, such as utility bills or taxes, in order to settle the transaction.

It’s important that you have these funds on settlement day because if you’re unable to settle by the agreed upon date, you’ll be charged interest. If you think you won’t be able to settle, then speak to your solicitor as soon as possible.

Once the transaction is settled, you’ll be given the keys to the property and you’ll have a new place to call home.

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Property ownership structure

Once you’ve bought a property, your name will appear on the Certificate of Title to reflect the new property ownership.

Your solicitor will help you with this process and they will register the certificate with your state government department. For instance, in NSW, it will be registered with Land and Property Information (LPI).

Learn more about property ownership structures and changing property ownership to ensure a smooth transition.

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Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

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