<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1653223531561810&ev=PageView&noscript=1" />
MMO Team Photo

Negotiating a Settlement Period

Settlement In a perfect world, you find the perfect home – complete with white picket fence – and settlement goes through on the agreed date with any dramas.

So you don’t end up with a truck full of moving boxes and no home to move into,┬áhere are a few things to consider when negotiating the settlement period on your next property purchase.

When you buy property, there will be a ‘settlement period’. It refers to the time that occurs between signing of the contract and completion of the sale i.e. settlement day.

‘Settlement day’ is when the bank releases your loan funds and the seller receives payment for the property. On this day, you become the rightful owner of the property and finally get the keys to your new home!


How long does the Settlement period normally last?

Generally, settlement periods are 30, 42, 60 or 90 days.

For the ACT, 30 days is standard for most contracts. In NSW, it’s more like 42 days.

But just because there might be a standard time frame, it doesn’t mean you have to agree to it.

You see, both the buyer and the seller must agree on the settlement period.

And with competing motivations, it can be tricky for both parties to happily agree.

Whichever side of the transaction you’re on, make sure you allow enough time for conveyancing, bank financing approval, organising your move, as well as potentially negotiating other property settlements (if you’re buying and selling at the same time).

How much time you need for this can depend on:

  • the complexity of your finance application
  • the lender you choose
  • lender’s current turnaround times
  • whether a full valuation is required
  • whether a guarantor is involved
  • your availability to sign documents
  • plus lots of other things (like how you plan to upgrade your home – ie. buy then sell or sell then buy).

If we’re assisting you through the process, we can suggest a realistic settlement period to ensure you don’t agree to something that’s not achievable.

You also need to check the settlement period when buying property at auction. Review the Contract and negotiate an alternative settlement period (if required) before Auction day. Because once that hammer falls, it’s too late to change terms in the Contract.


You might push for a longer settlement period if:

  • If you’re the seller and you’re still looking for a property to purchase
  • If you’re a buyer and you haven’t yet sold your own home
  • You’re selling and the buyer has requested you repair something
  • If you have an upcoming event that you want deal with first (wedding, big overseas trip, etc)
  • You’re buying off the plan, and you want time to build up your savings
  • You’re expecting to receive a windfall shortly that you need to finalise the purchase
  • You want the settlement to occur in a particular financial year


You might push for a shorter settlement period when:

  • You’re a seller who has already found another home
  • You’re a buyer who has already sold your current home and needs to move quickly
  • A holiday period or big event is coming up and you’re keen to move in beforehand
  • You’d like to undertake work on the property sooner rather than later
  • You need cash flow
  • You want the settlement to occur in a particular financial year


It’s important to get right

One-in-five property settlements in Australia are reportedly delayed by a week. Which means that even if you negotiate a settlement period all parties are happy with, things may still not go according to plan.

Settlement delays can be due to:

  • the lender not being ready to draw down the new loan
  • someone forgot to submit a discharge form to the outgoing lender (meaning the seller’s side is not ready)
  • delays caused by loan documents not being signed correctly
  • delays caused by legal processes


Final word

Whilst there will always be things outside your control that may affect settlement, the best way to increase your chances of moving in on time are –

a) Only agree to a settlement period that is realistic and achievable, given your situation

b) Get support from a team* who’ll do everything in their power to ensure you and your lender are ready to settle on the day you’re supposed to.


(*That’s us! Just give us a call)

Share this article

Award Winning Mortgage Professionals