Buying a Home: Understanding the Settlement Process
Real property settlement involves the meeting of the lender with the seller and the banking and legal representatives for the finalization of the purchase of the property.
Prior Settlement Day
There are few things that you must need to organise prior to settlement. And they are the following:
1. Have a settlement agent (a conveyancer or solicitor)
2. Ensure that the sales contract is duly signed and has the proper settlement date.
3. Have final and complete inspection of the property.
4. Make sure every fittings and fixtures are working well and present as mentioned in the sales contract.
5. Have enough money to complete the sale, covering lender’s mortgage insurance, stamp duty, and other charges and fees.
The morning of the settlement day, you should have final inspections of everything. Though you can have a professional to do the inspection for you, it would be better if you do it yourself especially if you’re concerned with the budget. However, when you’re not that confident to do the task yourself, it would be worthwhile to just hire a professional.
When buying a real property, make an arrangement with the agent to check if the things in the property are in good condition and are working well. Here are some of the things that you need to inspect.
- hot water system, appliances, heating and cooling
- walls, structure, window and floor coverings, and the light fittings
- locks, automatic garage door control, and the keys
- roof externals and void – flashing, gutters, roof tiles, trusses, insulation, and battens
- building interior – ducting and venting, ceiling, wet areas, painting
- exterior features – weep holes, termite barriers, decking, garage and carport construction and so on.
On this day, your settlement agent meets with the lender and the representative of the seller to have the documents and cheques signed and handed over. No need for you and the seller to be there. And at the title office, the documents will be sent to have you registered as the new owner.
Here are the things which the lender will do:
- Only when you have paid off everything, they will have a mortgage registered against the title.
- Provide funds to buy the property or have the existing loan paid out.
Here are the things which your settlement agent needs to ensure:
- Existing mortgage should be paid off.
- Caveats are removed.
- All requirements in the sales contract are met.
- Transfer of mortgage and land is title office registered
The lender will now draw down your loan after the settlement. This means that the lender will debit your loan account with the price they have paid at the settlement, including additional charges and fees.