What Happens During Refinance Settlement
Refinance settlement is the final stage where your new lender pays out your existing loan and formally takes over your mortgage. The process typically takes between four to six weeks from approval, though it can be shorter or longer depending on property valuations, document turnaround, and your current lender's discharge process.
Most people focus on comparing rates and features when they decide to refinance, but the settlement stage is where things become concrete. Your new lender coordinates with your existing lender to arrange payout figures, your solicitor or conveyancer prepares the necessary documentation, and you need to be ready to provide updated information if anything changes between approval and settlement.
Understanding the Payout Figure
Your new lender will request a payout figure from your current lender around seven to ten days before the planned settlement date. This figure includes your remaining loan balance, accrued interest up to the settlement date, any discharge fees your current lender charges, and break costs if you're coming off a fixed rate early. The payout figure is valid for a specific date, so if settlement is delayed, a new figure needs to be requested.
Consider a borrower refinancing a loan with $485,000 remaining. Their current lender provides a payout figure of $487,200, which includes the loan balance, twelve days of accrued interest, a $350 discharge fee, and $1,650 in break costs because they're exiting their fixed term six months early. If settlement moves by even three days, the interest component changes and a fresh payout figure is required.
Documents Your Solicitor or Conveyancer Will Prepare
Your solicitor or conveyancer handles the legal side of settlement. They prepare the discharge of mortgage for your existing lender and the new mortgage documents for your incoming lender. Both lenders must register these documents with Land Registry Services NSW, which is why the process takes time even after all parties agree on the settlement date.
You'll need to sign the new mortgage documents, usually a few days before settlement. Some lenders allow electronic signing, while others require wet signatures. Your solicitor will also arrange for any funds you need to contribute at settlement, such as additional cash if you're changing your loan amount or covering refinancing costs that aren't rolled into the new loan.
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What Happens on Settlement Day
On settlement day, your new lender transfers funds to your solicitor's trust account. Your solicitor then pays out your existing lender using the payout figure, pays their own fees and any other settlement costs, and transfers any remaining funds to you if you're accessing equity or releases the surplus back to the new lender if the loan amount is lower.
The actual settlement usually happens electronically through the Property Exchange Australia Limited (PEALE) system. Once your existing lender receives the payout, they authorise the discharge of their mortgage. Your new lender registers their mortgage on the title. You won't usually need to be present, your solicitor manages everything, but you should be available by phone in case any last-minute questions arise.
When You're Accessing Equity Through Refinancing
If part of your reason to access equity is funding a renovation, buying an investment property, or consolidating other debts, those funds are typically released at settlement. Your solicitor will confirm the exact amount you'll receive after all costs are deducted.
In one scenario, a couple refinancing to release equity for a deposit on an investment property had a payout figure of $520,000 and a new loan of $600,000. After paying out the old lender, covering $2,800 in solicitor fees and $395 in government charges, they received $76,805 at settlement. The timing mattered because they had already exchanged contracts on the investment property and needed those funds for their second settlement three weeks later.
Timing Between Lenders and Potential Delays
Settlement delays happen when payout figures expire, when property valuations come in lower than expected and the new lender needs to reassess, or when your existing lender takes longer than usual to process the discharge. Some lenders are known for slower discharge processes, which can push settlement out by a week or more.
If you're refinancing to access a lower rate and your current loan has an offset account or redraw facility, keep those funds where they are until after settlement. Moving money around just before settlement can trigger questions from the new lender and delay things further.
What You Need to Provide Before Settlement
Between approval and settlement, your new lender may request updated payslips, an updated rates notice if the one on file is more than three months old, or confirmation that you've organised insurance for the property. Even though you're already approved, lenders perform a final check to make sure nothing material has changed.
You'll also need to confirm your loan details one last time, including the interest rate type you're locking in, whether you want an offset account, and how you want to structure any split between variable and fixed portions. Once settlement happens, changing these features usually means going through a formal variation process, so double-check everything before signing the mortgage documents.
After Settlement: What Changes Immediately
Once settlement completes, your repayments to the old lender stop and repayments to the new lender begin. Your first repayment with the new lender is usually due around four weeks after settlement, though some lenders allow you to choose your repayment date.
Your old lender will send a final statement showing the payout and confirming the loan is closed. Your new lender will send a welcome pack with your loan details, online banking access, and information about how to make extra repayments or use any features like offset or redraw. If you've set up direct debits for your old loan, cancel them so you don't accidentally make payments to a closed account.
Your solicitor will confirm once the new mortgage is registered on the title and the old mortgage is formally discharged. This registration can take a few days after settlement, so don't be concerned if you don't see the updated title immediately. Once it's done, your refinance is complete.
Call one of our team or book an appointment at a time that works for you to talk through your refinance and make sure settlement goes smoothly.
Frequently Asked Questions
How long does refinance settlement take in NSW?
Refinance settlement typically takes four to six weeks from approval. The timeline depends on how quickly your current lender processes the discharge, whether a property valuation is required, and how fast all parties return signed documents.
What is included in a loan payout figure?
A payout figure includes your remaining loan balance, interest accrued up to the settlement date, any discharge fees, and break costs if you're exiting a fixed rate early. The figure is valid only for a specific settlement date.
Do I need a solicitor for refinance settlement?
Yes, you need a solicitor or conveyancer to prepare the discharge of your old mortgage and register the new mortgage with Land Registry Services NSW. They also manage the transfer of funds on settlement day.
When do I receive equity funds after refinancing?
Equity funds are released at settlement after your old lender is paid out and all settlement costs are covered. Your solicitor transfers the remaining amount to your nominated account on settlement day.
What happens to my repayments after refinance settlement?
Your repayments to the old lender stop immediately after settlement. Your first repayment to the new lender is usually due around four weeks later, though some lenders let you choose your repayment date.
