You have just received the call: your home loan is approved! All that hard work and sacrificing of smashed avocado on toast has been worth it. You are the proud owner of your own home… almost. Take a breath, for you now have to organise things for settlement.
Settlement is the date decided by both you and the seller as to when the official handing over of money and keys will take place. To get here, there are a couple of steps you have to take first. Let's break it down...
I know, at this stage, you will likely have RSI from all the documents you have already signed just to lodge the loan. Unfortunately, there are still more to come. The lender will send you a stack of paperwork which you will need to read, sign and send back to the bank.
And when I say read, I mean read. This isn’t just a phone contract you're signing... this is a massive investment. Make sure you are happy with everything and triple check the documents are correct. I always would recommend signing up with your broker. That way, they can check the figures are right and answer any questions you may have.
Hopefully, you have already found an amazing settlement agent, and this is where they come into play. Once they have your approval in hand, they will begin to prepare their documents. Yep, look out RSI! There are more documents to sign. These will be the last documents that require your signature however, so those hands can rest up until moving day.
Your settlement agent is effectively the person who is in charge of the handing over of money to the correct place. They are also responsible for ensuring your name is on the title and the settlement date is archived.
Prime tip: don't skimp on your settlement agent. While you will be wanting to save money where possible after the massive amounts you have put towards a home already, don’t go with the cheapest settlement agent. Always go with the one with the best reputation. These people are your lifeline at this point - there are many avenues where something can go wrong which could either delay settlement further or put some legal issues in your lap, and the professional settlement agents will be the ones that will be prevent this from happening.
Most lenders need to see that you have insured the property before settlement. Even if they don’t, you would be crazy not to get it. The lenders who want it before settlement will ask for a COC, also known as Certifcate of Currency (not all acronyms work well). Whoever you insure with will know what you talking about when you ask for this, so don’t stress if you have no idea what it is.
The things that you will need to know when you call them to arrange this (aside from the obvious home address) are the following:
- Interested Party: This will be the bank or acting party for the bank. Ask your broker or check your loan documents as this will be listed somewhere.
- Insured Amount: Many lenders will require that your insurance is for a minimum amount, again check with you broker or bank.
- Start Date: Make sure your insurance commencement is from the date of settlement or before.
The above three are vital - many banks will not move to settlement unless these are spot on.
It had to come. Your account had been looking so happy with that deposit sitting patiently, waiting, and now is the time to bid it farewell. There are a number of ways that this can happen - some lenders will get you to sign an authority which allows them to take the funds from your account on the day of settlement, others will want your settlement agent to handle this, which will mean transferring funds to them and them taking the funds to settlement.
I recommend talking to both your broker and settlement agent to see which way is best for you. Make sure you do this early on - if you are 2 days from settlement and you still have no idea how this is happening, this could be a major problem. Better to be ready early than to delay getting those keys.
And that’s it, well at least that’s it to get to settlement. Moving in is a whole different article.
To Be Continued…