Refinancing settlement procedures can seem overwhelming, but understanding the process helps you prepare for what lies ahead. When you decide to refinance home loan arrangements, the settlement stage marks the final step where your old mortgage gets paid out and your new loan officially begins.
What Happens During Refinancing Settlement
Refinancing settlement involves several key steps that occur on the settlement date. Your new lender provides funds to pay out your existing mortgage while simultaneously establishing your new loan terms. This process typically happens through your solicitor or conveyancer who coordinates between all parties.
The settlement agent will:
• Calculate the exact payout amount for your current mortgage
• Arrange for the new lender to provide settlement funds
• Process the discharge of your old mortgage
• Register the new mortgage against your property title
• Handle any additional costs or adjustments
Preparing Your Documentation
Successful mortgage refinancing settlement requires proper documentation. Your refinance application process will have gathered most required papers, but settlement day demands specific current documents.
Essential documents include:
- Property valuation (if required by your new lender)
- Current insurance policy details
- Rates notice and body corporate statements
- Identification documents
- Signed loan documents from your new lender
Your mortgage broker will typically coordinate with your legal representative to ensure all paperwork is ready well before settlement.
Understanding Settlement Costs
Refinancing settlement involves various costs that impact your loan amount. Discharge fees from your current lender typically range from $150 to $400. Legal fees for handling the settlement process usually cost between $800 to $1,500 depending on complexity.
Additional costs may include:
• Government registration fees
• Lender establishment fees
• Property valuation costs
• Mortgage insurance (if applicable)
Some lenders offer cashback incentives that can offset these settlement costs, particularly when you're switching to access a lower interest rate.
Timing Your Settlement
Settlement timing affects your interest payments and cash flow. Most refinancing settlements occur within 30 to 60 days after loan approval. Your new lender coordinates with your existing lender to determine the optimal settlement date.
Consider these timing factors:
• Your current loan's interest payment cycle
• When your fixed rate period ending occurs
• Property insurance renewal dates
• Your personal cash flow requirements
Many Perth homeowners time their settlement to coincide with their fixed rate expiry to avoid break costs while accessing potentially lower interest rates.
What Happens After Settlement
Once settlement completes, your old mortgage disappears and your new loan becomes active. You'll receive confirmation that the discharge has been processed and your new mortgage is registered. Your previous lender should provide a final statement showing zero balance.
Your new mortgage features become immediately available, including:
• Refinance offset account access
• Refinance redraw facilities
• Online banking for your new loan
• New repayment schedule
If you've chosen to access equity for investment purposes or cash out refinance options, these funds typically become available on settlement day.
Common Settlement Issues
While most refinancing settlements proceed smoothly, some issues can arise. Document delays, property valuation disputes, or last-minute changes to loan terms can postpone settlement dates.
Staying proactive helps avoid complications:
• Respond promptly to any lender requests
• Keep your insurance current and updated
• Maintain communication with your legal representative
• Don't make major financial changes during the process
Working with experienced professionals helps identify and resolve potential issues before they impact your settlement timeline.
Perth-Specific Considerations
Perth property settlements follow Western Australian legal requirements. Your conveyancer or solicitor must be familiar with local procedures and government requirements. Property valuations may need updating if market conditions have changed significantly since your initial loan health check.
Local factors that can influence settlement include:
• WA property market conditions affecting valuations
• State government charges and fees
• Local council requirements
• Regional lender policies
Working with Perth-based professionals who understand local requirements helps ensure your refinancing settlement proceeds without unnecessary delays.
Refinancing settlement represents the culmination of your mortgage refinancing journey. Proper preparation and understanding of the process helps ensure you can start enjoying your new loan terms, whether that's a lower interest rate, improved cash flow, or access to equity for your next investment.
Call one of our team or book an appointment at a time that works for you to discuss your refinancing settlement needs.
