There are a lot of things that have to happen between the time that you sign a contract of sale for a property and being able to move in. Many steps along the way that involve quite a few different people, documents to sign, and processes to be followed.

The length of time this takes depends on if the process has already been started. Your broker needs to gather all necessary information and documents from you to start the process for the finance application. These include ID, payslips, tax statements, bank statements, information and statements for any liabilities or assets, and information about your position and what you are wanting to do. From there the information needs to be collated and calculations need to be run to see if what you are trying to do is viable. If it is, then lenders and loan products can be reviewed and selected by you. 

At this point, an application can be put together and submitted to the lender. The lender will then assess the application. The length of time this takes varies greatly depending on the lender – it can be anywhere between a few days to a few weeks. They may request more documents or information from you before they are able to approve the application. Once they are satisfied, they can issue conditional or formal approval. 

Ideally, you will have already submitted an application and have conditional approval or approval in principle before signing a contract. This process can take time and it will speed up the process to have conditional approval in place for the loan to be formally approved once you have a signed contract. It will also give you some assurance when viewing properties that you are able to get the finance required for the purchase.

Once you have a contract and your solicitor or conveyancer has read over it, and you have signed it there are further steps needed to get formal approval.

Additionally, the property needs to be valued by the lender and they determine whether it is an acceptable security for them. Once the value of the property is ascertained, the loan to value ratio will determine if it needs to be approved for Lenders Mortgage Insurance.

Only once all of these steps have been completed Formal Approval can be given, and contracts can be exchanged/go unconditional depending on your state. 

This is when the settlement phase begins. This time can vary and is specified on the contract. It is often 45 or 60 days. An extended settlement would be 90 days. Unless it is a cash purchase, and the funds are ready in your account it can be extremely difficult to get a settlement done in under 45 days.

Once you have formal approval, loan documents get issued to you to be signed and sent back to the lender and their legal team.

Even in a straightforward purchase, there are still many parties involved that have a lot of background work to get done. There is your solicitor, your lender, the lender’s solicitors, the vendor’s solicitor, and the vendor’s bank’s solicitors if they have a mortgage.  

If it is a more complicated purchase with a bridging loan or a simultaneous settlement, there are even more people involved in processing the transaction and more background paperwork that needs to be completed for the settlement to occur.

When all of these parties are ready, the settlement can be booked. Some states require paper settlements where all the involved parties have representatives in a room to manually process the settlement.  However, in most states now this process has been streamlined online in an electric space called PEXA. 

Only now will the property that you have purchased will become yours. If the settlement occurs outside of the date stated on the contract, you may be charged penalty interest for every day that it does not settle.

To avoid stress and added costs, it is in your best interest to have pre-approval before signing contracts and ideally have a settlement period that is at least 60 days.