Settlement is the stage where your new lender pays out your old one, and your refinance becomes active.
Most of the work happens behind the scenes once your application is approved. The new lender organises discharge with your existing lender, your solicitor or conveyancer prepares documents, and a settlement date is booked. You sign the final loan documents, the funds are transferred, and your old loan is closed. The process typically takes between two and six weeks from approval, depending on how quickly each party moves.
What Happens Between Approval and Settlement
Your new lender prepares a settlement statement and sends a discharge authority to your current lender. The current lender calculates the payout figure, which includes your remaining loan balance, any accrued interest, and discharge fees. If you are coming off a fixed rate before the end of the term, break costs may also apply. Your new lender books a settlement date with all parties, usually coordinated through your solicitor or conveyancer.
In our experience with clients around Croydon North, settlement timing often depends on how quickly the current lender processes the discharge request. Some lenders take a few days, others can take two weeks. If you are refinancing an investment property or accessing equity at the same time, the valuation and final loan documents can add another week.
Who Does What During Settlement
Your new lender arranges the payout and transfers funds to your old lender. Your solicitor or conveyancer prepares the discharge of mortgage documents and lodges them with the land titles office once settlement is complete. Your existing lender provides the final payout figure and releases the mortgage over your property. You sign the new loan documents, which are usually sent by email or post a week before settlement.
Consider a scenario where someone is refinancing to consolidate debt and access equity for renovations. The new lender needs to confirm the valuation supports the increased loan amount, the solicitor prepares documents for both the discharge and the new mortgage, and the existing lender calculates the payout including any redraw balance. Once all parties confirm the figures match, settlement proceeds. The client signs the final documents, the funds transfer on the agreed date, and the old loan is closed within 48 hours.
Settlement Costs You Should Expect
You will pay a discharge fee to your current lender, usually between $150 and $400. Some lenders also charge a settlement or exit fee, though these have become less common. Your solicitor or conveyancer will charge between $300 and $800 depending on the complexity of the transaction. If you are switching lenders, the new lender may cover some of these costs through a cashback or refinance offer, but you should confirm what is included before proceeding.
If you are refinancing within a fixed rate period, break costs can range from a few hundred dollars to several thousand, depending on how much time is left and how far rates have moved since you locked in. Your current lender will provide a break cost estimate once you request a payout figure. These costs are deducted from the payout amount on settlement day, so you do not need to pay them separately.
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How Long Does Settlement Take
Settlement usually takes between 14 and 45 days from the date your new loan is formally approved. The timeline depends on how quickly your current lender issues the payout figure, how soon your solicitor can prepare the documents, and whether any valuation or title issues arise. In straightforward cases where you are refinancing a standard home loan with no equity release or property changes, settlement can be completed in two to three weeks.
Delay usually comes from one of three places: the current lender taking longer than expected to provide the payout figure, the solicitor waiting on documents from either lender, or a mismatch between the settlement date and your pay cycle if you need to transfer funds for settlement costs. If you are refinancing close to the end of a fixed rate period, timing the settlement date to avoid break costs requires coordination between all parties.
What You Need to Do Before Settlement Day
Sign and return the loan documents as soon as you receive them. Your new lender will send these about a week before settlement, and any delay in returning them can push the settlement date back. Confirm the settlement date with your solicitor and make sure you understand what funds, if any, you need to have available. If you are refinancing to a higher loan amount and accessing equity, confirm where those funds will be directed once settlement completes.
Check that your current lender has your correct loan account details and that there are no outstanding payments or fees on the existing loan. If you have been making extra repayments into a redraw facility or offset account, confirm with your new lender whether those funds will carry over or need to be withdrawn before settlement. Some clients around Croydon North refinance to a loan with an offset account specifically to retain flexible access to savings, and confirming this before settlement avoids confusion later.
What Happens on Settlement Day
Your new lender transfers the payout amount to your existing lender. This usually happens electronically and is completed by early afternoon. Your existing lender applies the funds to close your loan and sends a discharge authority to the land titles office. Your solicitor lodges the discharge of mortgage, which removes your old lender from the title and registers your new lender as the mortgagee. Once the discharge is lodged, your old loan is closed and your new loan is active.
You will not usually need to do anything on settlement day itself. Your solicitor and lenders handle the transfer and paperwork. If you are refinancing to access equity, the additional funds are usually available in your nominated account within 24 to 48 hours of settlement. If you have set up an offset account or redraw facility with the new lender, those features become available as soon as the loan settles.
After Settlement: What to Confirm
Check that your old loan account shows a zero balance and that no further debits are scheduled. Your old lender should send a final statement within a few days of settlement confirming the loan is closed. If you were paying your old loan through direct debit, cancel the payment arrangement to avoid any failed debit attempts. Confirm that your new loan account is active and that your repayment schedule matches what was agreed in your loan documents.
If you have refinanced to a lower interest rate or to access an offset account, confirm that the interest calculation reflects the new rate and that your offset balance is linked correctly. In some cases, there can be a delay between settlement and the offset account becoming active, which means you may be charged interest for a few days until the link is established. Your new lender can confirm this and adjust the account if needed.
If you are uncertain about any stage of the settlement process, or if you want to confirm that your refinance is structured to suit your circumstances, call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
How long does refinancing settlement take?
Settlement usually takes between 14 and 45 days from formal loan approval. The timeline depends on how quickly your current lender provides the payout figure, your solicitor prepares the documents, and whether any valuation or title issues arise.
What costs should I expect during refinancing settlement?
You will pay a discharge fee to your current lender, usually between $150 and $400, and solicitor or conveyancer fees between $300 and $800. If you are exiting a fixed rate early, break costs may also apply and are deducted from the payout amount on settlement day.
Do I need to do anything on settlement day?
You typically do not need to do anything on settlement day itself. Your solicitor and lenders handle the payout, fund transfer, and discharge of mortgage. If you are accessing equity, the funds are usually available in your account within 24 to 48 hours of settlement.
What happens to my old loan after settlement?
Your old lender applies the payout funds to close your loan and sends a discharge authority to the land titles office. Your solicitor lodges the discharge, which removes the old lender from the title and registers your new lender as the mortgagee.
What should I check after refinancing settlement?
Check that your old loan account shows a zero balance and cancel any direct debit arrangements. Confirm that your new loan account is active, your repayment schedule matches the agreed terms, and any offset account or redraw facility is linked correctly.
