[Video] Simple Breakdown Of The Property Settlement Process

Key Outcomes

Liz Zaki from OneSite Finance outlines the complete deposit and property settlement process, covering timing requirements, account management, and cost breakdowns.

Clients must transfer settlement shortfall funds to the lender’s transaction account at least 3 working days before settlement and ensure all contributions come from the correct accounts to preserve tax deduction eligibility.

Process Overview

Deposit Structure (Non-Auction)

Before the property settlement process  can take place, you have to organise for the transfer of the deposit.

• Initial deposit: 0.25% in New South Wales (varies by state—$1,000 or $5,000 in other states) to lock in the purchase
• Balance of deposit: Due at end of cooling-off period or when finance clause expires
• Total deposit flexibility: New South Wales allows 5% or 10% (negotiable); other states have varying amounts like $10,000 or $30,000
• Settlement shortfall: Remaining contribution required at settlement (difference between deposit and loan amount)

Cost Components

Using a $918,000 Queensland property example, the costs involved in the property settlement process are:

• Purchase price
• Stamp duty (varies by state)
• Transfer fee (Queensland-specific; New South Wales has none)
• Additional costs: approximately $5,000 budgeted for solicitor/conveyancing fees, government registration, settlement adjustments, inspections, and bank upfront fees (higher for expensive properties)
• Buyer’s agent fees if applicable

Settlement Fund Management

Account Setup Requirements

• Larger banks (ING, CBA, Westpac): Create a transaction account or offset account with the lender
• Transfer settlement shortfall (e.g. $217,720 rounded to $218,000) from existing savings to new bank transaction account
• Funds must arrive 3 working days before settlement (technical requirement is 1 day, but 3 days recommended to avoid last-minute issues)

Transfer Best Practices

• Check internet banking limits: Large transfers may be restricted (e.g., $10,000 daily limit)
• Branch transfers: Available for one-hit transfers (some banks charge ~$35)
• Test transfer: Send $10 first to verify account connection before transferring full amount

Critical Tax Consideration

Settlement funds must come from the correct source account. If using equity release from an existing property, transfer from that equity account – not from an owner-occupied home loan offset account – to preserve tax deduction eligibility.

Insurance Requirements

Building Insurance

• Houses: Building insurance certificate of currency required, listing the new bank as mortgagee/interested party
• Strata properties (units/townhouses/villas): Larger banks (Westpac, CBA) typically don’t require it; smaller banks do—request from strata corporation via solicitor

 

Pre-Settlement Actions

Final Inspection

Conduct a final property inspection before settlement to verify:

• Property condition matches original viewing (typically 6-8 weeks prior)
• Property is clean with no damage (e.g., holes in walls)
• All included fixtures remain (past issues: vendors swapping dishwashers for cheaper brands, removing blinds that were included in sale)

Financial Verification

• The OneSite Finance team coordinates with your solicitor / conveyancer to verify settlement figures
• Clients can forward conveyancer emails for figure verification
• Example: If calculated shortfall is $218,000 but conveyancer states $200,000, significant discrepancy requires investigation

Service Scope

OneSite Finance provides rough settlement calculations to ensure sufficient funds for completion; solicitors/conveyancers provide exact cost breakdowns closer to settlement.