Have you just signed a contract of sale on a home? Congratulations—but the process isn’t over yet. Between signing the dotted line and picking up the keys, there are critical legal and financial hurdles you must clear to protect your deposit and ensure the property legally becomes yours. In this guide, written by an expert mortgage broker in Brisbane, maps out exactly how to get from contract to settlement without the stress.
Let’s dive in!
Step #1: Pay Your House Deposit
There is always a deposit payable to the real estate agent when you have signed a contract of sale.
But did you know the deposit is paid in two parts?
The first part is a holding deposit (also called the initial deposit), which is usually a small amount between $500 and $2,000 (or up to 0.25%) to secure the property.
The holding deposit shows that you are serious about buying the property and needs to be paid within 3 business days of signing the contract of sale. If you do not pay the holding deposit, your signed contract can be considered void!
The second part is the balance deposit, which is more substantial. It is either a set percentage of the purchase price (like 5% or 10%) or a fixed amount, like $25,000.
The balance deposit is paid once your finance and other conditions have been met.
This deposit is paid directly to the real estate agent’s trust account by Electronic Funds Transfer, Cheque or Bank Transfer.
The deposit holder’s trust account details are on page 3 of the standard signed contract of sale in Queensland. The real estate agent is usually the deposit holder.
Once you pay your holding and actual deposit, you need to request a receipt from the real estate agent to confirm this has been paid.
The real estate agent will hold the deposit in their trust account until settlement, and the amount you pay in deposit will reduce how much you need to pay at settlement.
For example, if your purchase price is $500,000 minus the bank loan of $450,000 and you had paid a $10,000 initial deposit, you only need to pay the deposit balance or $40,000 at settlement.
Step #1.5: Arrange Insurance Immediately (Don’t Wait!)
This is probably the single most important step that gets missed by homebuyers.
Did you know that in Queensland, the risk of the property passes to you at 5:00 pm on the first business day after the contract of sale is signed?
That’s right—it does not wait until settlement.
This means if the house accidentally burns down or is damaged by a storm during the settlement period, you are still legally required to go through with the purchase.
(Note: This is different to other states like New South Wales and Victoria, where the risk generally passes at settlement. However, in Queensland, you are on the hook almost immediately).
So, what do you do?
You need to arrange a Cover Note for Building Insurance straight away.
Most insurers will issue a cover note over the phone immediately. This is a temporary policy that covers you for the settlement period (usually up to 90 days) until you officially own the home and full insurance kicks in.
Action Step: Call an insurer right now and ask for a cover note for the property address. It takes 10 minutes, costs very little (sometimes it’s even free for existing customers), and it protects your future home from day one.
Step #2: Get Your Loan Formally Approved
Now it’s time to get in touch with your Mortgage Broker.
The steps in getting your loan formally approved include:
- Get the Contract of Sale to your Mortgage Broker. Let your Mortgage Broker know you have signed the contract of sale, how many days you have allowed for finance and when settlement is supposed to happen!
- Some documents might be needed. Depending on whether or not you have a pre-approval and when it was approved, your Mortgage Broker may need updated documents from you, including payslips or bank statements.
- A Proper Bank Valuation is Ordered. Your mortgage broker will organise a bank valuation now that you’ve found a property you have your heart set on. A property valuer will inspect the property and let you know what the property is worth. Sometimes, this may be different to your purchase price.
- Receive your Formal Approval (also referred to as unconditional approval). ‘Formal approval’, also known as ‘unconditional approval’, is when your home loan application has been fully approved without you needing to meet any other conditions, and the bank is happy to give you the money towards your new home!
- Let your solicitor (or conveyancer) know it’s all good in the hood. Now your finance is approved (and assuming your building & pest report is fine), it’s time to let your solicitor know that you are happy to go unconditional on your contract and proceed with the purchase. They will formally notify the Real Estate agent and property sellers.
What happens if my home loan gets declined?
Don’t worry; this happens sometimes. Did you know that in 2018, over 40% of home loan applications were rejected by banks?
You have 2 options when your home loan has been declined by a bank:
- Option 1: Speak with your Mortgage Broker about applying for another loan with another bank.
- Option 2: Provided you signed the contract of sale subject to finance, let your solicitor know you were unsuccessful with finance. They can terminate the contract and get your deposit refunded.
Read More: First Home Buyer Loans
Step #3: Arrange Building & Pest Inspection
Building and pest reports are what we consider the most common and almost mandatory cost when buying a house.
These reports look at the building’s structural soundness and pests to ensure you aren’t flatting with termites or white ants.
A typical building inspection for a 4-bedroom home can cost $400-500, and a pest inspection $200-300. The good news is that you can save a few hundred dollars by getting a combined building and pest report for around $500-600.
With white ants, termites, or even dampness, you can’t physically see them from the outside.
Building & Pest Inspectors (who in Queensland are generally licenced builders) will inspect under the house, in the roof and use their own technical equipment to check for damp and other issues.
“I can say that Building & Pest reports have saved me over 5 times from buying complete dumps of properties. I’m not kidding when I say these reports have saved me over 5 times.
In one year, I literally spent over $2,000 on reports for different properties before finding the right place, but I’m glad I did!
One of the properties had concrete cancer. Another had issues with flooding and water leaking through the walls, which were going to cost the new owner $9,000 to fix. Another had termites in a tree in the backyard and evidence of old damage to the roof.
This was all stuff I wouldn’t have found out without using a building & pest inspector.”
What happens if I get a bad building & pest report?
Not to worry, just let your solicitor know there is an issue with the building & pest report, and they can terminate your contract.
If you had signed the contract subject to a building & pest report, you will get a full refund of your deposit.
Common Major Defects: When to Terminate Your Contract
It is important to remember that a Building & Pest report is not a “to-do list” for the seller to fix every loose door handle or cracked tile. You are looking for major structural defects or safety hazards that would cost thousands to repair.
Here are the most common “deal breakers” that often justify terminating a contract or negotiating a massive price reduction:
- Active Termite Activity: Old damage might be manageable, but if live termites are currently eating the house, it is a huge risk.
- Structural Subsidence: If the inspector finds significant movement in the slab or “sinking” foundations, this can cost tens of thousands to underpin and fix.
- Waterproofing Failure: Leaking showers are incredibly common. If water is leaking behind the tiles into the walls or floor, the entire bathroom may need to be ripped out and re-done.
- Safety Hazards: This includes unsafe electrical wiring, exposed asbestos, or rotting deck supports that make the home unsafe to live in.
- Illegal Building Works: If the pergola, deck, or downstairs granny flat was built without Council Approval, the council can legally force you to tear it down.
- Roof Replacement Needed: A few rusted screws are fine, but if the roof sheeting is completely rusted through and needs a total replacement, that is a major expense you shouldn’t inherit.
Note: If your report uncovers any of these, speak to your solicitor immediately. They can advise if these meet the threshold to terminate the contract under the Building & Pest clause.
Read more: Renegotiating house price after building inspection
Step #4: Sign Your Documents
At this point, your Mortgage Broker will arrange a time to sign your loan documents.
You will need to sign your Home Loan Contract, Mortgage (title) Document, Direct Debit Agreement and any other bank forms.
You should also contact your solicitor to confirm some important details, such as the date of settlement, whether any other fees are payable, and whether you need to arrange any cheques for settlement…
Understanding 'Funds to Complete' (The Shortfall Calculation)
A few days before settlement, your solicitor will send you a document outlining the exact amount of money you need to transfer to finalize the sale. They often call this the “Funds to Complete” or the “Shortfall.”
Many buyers panic when they see this number because it is often higher than they expected.
This happens because you aren’t just paying the difference between the house price and the loan—you are also paying for government fees and adjustments on top.
Here is a real-world example of how the “Shortfall” is calculated:
Example Scenario:
- Purchase Price: $600,000
- Plus Stamp Duty (Government Tax): ~$20,000
- Plus Council/Water Adjustments: ~$2,000
- Minus Bank Loan (80% LVR): ($480,000)
- Minus Deposit Already Paid: ($30,000)
= Cash Shortfall needed at settlement: $112,000
In this example, even though the “gap” between the loan and the house price is only $90,000 ($600k – $480k – $30k deposit), you actually need to provide $112,000 on the day to cover the extra costs.
Pro Tip: Make sure this money is sitting in a linked bank account ready to go at least 3 days before settlement. If the money is stuck in a term deposit or a high-interest account that is hard to access, it can cause settlement to fail.
Bonus: Understanding Settlement Adjustments & Stamp Duty
One of the biggest shocks for homebuyers is finding out the final cheque they need to write is bigger than they thought.
You might assume that if you bought a house for $500,000 and paid a $10,000 deposit, you simply owe the remaining $490,000.
Unfortunately, it’s not that simple.
There are extra costs involved in the legal transfer of the property that will change your final figure. This is often referred to as your “Funds to Complete.”
Here is what you need to budget for:
1. Pro-Rata Adjustments
When you buy a home, you take over the bills from the day of settlement. However, the seller has often paid the Council Rates or Water Rates for the whole quarter in advance.
Because you will be the owner for part of that quarter, you need to reimburse the seller for the days you will own the property. This is called a pro-rata adjustment.
Common adjustments include:
- Council Rates: Adjusting for the portion of the rating period you will own the home.
- Water Rates: Sharing the fixed access charges (usage is usually paid by the seller up to settlement).
- Body Corporate Fees: If you are buying a unit or townhouse, these levies will also be adjusted.
2. Stamp Duty (Transfer Duty)
This is the big one. Stamp Duty is a state government tax charged on the transfer of the property title.
Unlike your deposit, which comes off the purchase price, Stamp Duty is an additional cost on top of the price. Depending on which state you are in, this is usually payable at or before settlement.
Your solicitor will work out all these figures for you in a document called a “Settlement Statement” a few days before settlement, so you will know exactly how much is required.
Step #5: Get The Power Connected & Mail Redirected
Moving costs might seem like an obvious one, but have you thought about getting the power connected and mail redirected?
Houses don’t have power connected unless someone is paying the bills…
So remember to plan ahead and shop around to see what deals you can get on your power.
With the increase in competition in Brisbane’s energy market, we’ve found that you can get any connection costs waived, provided you sign up for a 12-month contract. Phone around and see what you can do, but companies like Origin make this pretty easy when moving into a new home.
Redirecting your mail is pretty easy, too. Australia Post has details, but a word of warning—it takes them 3 days to set up the redirection. So try to do this before settlement!
Read More: Moving & Connection Costs when buying a home
What Actually Happens On Settlement Day?
You might be picturing a room full of lawyers in suits sliding cheques across a mahogany table.
In reality, settlement is now almost entirely digital.
Thanks to a system called PEXA (Property Exchange Australia), you do not need to attend a physical meeting, and neither does your solicitor. It all happens automatically online.
Here is the play-by-play of the digital exchange:
- 1. The Money Moves: Your bank releases the loan funds and sends them directly to the seller’s bank.
- 2. The Documents Swap: Simultaneously, the Land Titles Office receives the digital instruction to transfer the title from the seller’s name into yours.
- 3. The Registration: The mortgage is registered on the title, and the property officially becomes yours.
The Question Everyone Asks: "When Do I Get The Keys?"
Just because the money has left your bank account doesn’t mean you can grab the keys at 9:00 am.
You only get the keys after the seller’s solicitor sends written confirmation to the Real Estate Agent that the funds have officially cleared in their account.
Real-world tip: This usually happens between 2:00 pm and 4:00 pm.
We always recommend not booking your removalist for the morning of settlement. If there is a slight banking delay (which is common), you will be paying removalists to sit in a truck while you wait for that “all clear” phone call.
What Can Cause Settlement To Be Delayed?
Unfortunately, plenty of things can go wrong from the time you sign the loan contracts until settlement, which can cause massive delays. Some of these delays can be caused by:
Bank Problems: The bank might be delayed when they get your contracts back. They might be processing issues you might have missed, e.g., a signature, which can cause settlement to be pushed out by days and sometimes even weeks.
Final inspection issues: Before the day of settlement, you’ll generally do a pre-settlement inspection. You will check out the property to make sure there are no holes in the wall and that they’ve fixed up any things they promised they were going to fix up. If the problems haven’t been rectified, this can cause massive delays in your settlement.
Simultaneous settlement: The third problem we see all the time is if the sellers are trying to buy another property or refinance a loan on the same day. It’s called a simultaneous settlement. This means that you need to coordinate multiple parties to try and settle on that one day when you’re supposed to hand over the keys. This complexity can invariably cause massive delays with your settlement, which can really risk your deposit.
Late Documentation: The fourth thing that can cause some delays is late documentation. Simply missing a signature or if your conveyance your solicitor forgets a form or a bank document can cause issues. The banks won’t settle your home and, therefore, can delay settlement. It’s not necessarily your fault, but it can happen all the time, and we see it so often.
What Happens If Settlement Is Delayed?
So, what happens if your settlement is delayed, and what are some of your rights and things that you can do when it happens? Well, in this section, we will break it down by state because every state is a little bit different.
Note: This isn’t legal advice. You should consider your personal situation and speak to a lawyer.
Queensland: Unfortunately, it’s one of the harshest states in Australia. In Queensland, one of two things happens. Number one, the seller will agree to extend your settlement, and it’ll be fine – you can push it back a couple of days if everyone’s pretty happy. Number two, which is the worst case, is if you’ve determined a settlement date on the contract, the seller can choose to terminate the contract altogether. That means that they can take your deposit. So, if you put down 5% or 10% of the property’s purchase price on the contract, they can actually take that if your settlement is delayed.
Western Australia: They’re a little bit more lenient than Queensland. They generally have a rule that gives you a three-day leniency on the settlement date. So, if you can’t make it on Monday, they might push it back three business days, but then they will start charging you penalty interest for every day that you’re late. Again, the conditions will depend on your contract, so check it out with your lawyer.
New South Wales: They will charge you penalty interest for every day that you’re late. Then, they can issue what’s called a notice to complete. This document says that you must settle on a certain date, or the contract will be terminated, and you’ll forfeit your deposit. The number of days in the notice to complete is usually about 14 days, so at least you’ve got a bit of breathing space there, but obviously, it is not a situation you want to get to, and you want to resolve quickly.
Victoria: In Victoria, it’s similar to New South Wales. They will charge you penalty interest, which can be up to 10% every day that you’re late. So you can end up racking up thousands of dollars in extra penalty fees that you wouldn’t otherwise have to pay if your settlement wasn’t delayed.
How do you reduce the risk of having a settlement delayed?
- Be organised – if the bank sends you documents, try not to sit on them for too long; you need to sign and return them as soon as you can because once you send the documents back to the bank, they can take a few days and sometimes, if it’s busy, a few weeks to verify the documents. They’ll double-check the signatures and make sure everything is in order to settle your home loan. If there’s something missing or wrong, they’ll have to send the document back, which can delay things weeks at a time. So, get a mortgage broker to double-check the documents before you send them back.
- Choose the right team—you want to work with solicitors and conveyancers who already know the process, understand the ins and outs and are aware of the timeframes to ensure that everything goes smoothly so that you’re not having to run around at the last minute getting bank accounts closed and signing different forms.
- Keep up communication – with property, it’s all pretty slow and a bit manual, but you must always ensure that communication is being kept up. Most importantly, you want to put your mortgage broker and your solicitor or conveyancer in touch with each other so they can communicate and coordinate your settlement to make sure it goes through super smoothly and there are no delays from them waiting on each other or waiting on you for certain documents.
- Pay attention to detail—check the documents before signing them. Make sure that the deposit amount hasn’t changed. Make sure that your name is spelled correctly. All these little things can cause massive delays with settlements.
Checklist: What to Test During Your Final Inspection
The final inspection is your last chance to check the property before you hand over the money. Once settlement happens, it is very difficult to get the seller to fix anything.
We recommend doing this inspection 24 to 48 hours before settlement.
Use this checklist to make sure you don’t miss anything:
- Test all electricals: Turn on every light switch, ceiling fan, and exhaust fan.
- Check the Air-Conditioning: Run all split systems and ducted units on both “hot” and “cold” modes for a few minutes.
- Run the taps: Turn on the shower and sink taps to check for leaks or major pressure issues.
- Test the appliances: If the dishwasher, oven, or stove are included in the sale, turn them on to ensure they heat up or cycle correctly.
- Check the pool equipment: Ensure the pump and chlorinator are running and the pool is clean (if the contract states it must be maintained).
- Open and close remote garage doors: Make sure the remotes are there and working.
- Look for rubbish: Ensure the seller has removed all their furniture and hasn’t left piles of rubbish under the house or in the shed.
Tip: If you find a new issue that wasn’t there when you signed the contract (like a hole in the wall from moving furniture), take a photo and send it to your solicitor immediately. They may be able to withhold a small amount of funds at settlement to cover the repair.
Bonus: Is A 21-day Finance Clause Right?
The short answer is no.
In a competitive property market like Brisbane, 21 days is WAYYY TOO LONG, and you could miss out on your property.
Finance clauses represent a risk for the property seller. If they accept an offer for a purchase with a 21-day finance clause, then they run the risk of you walking away from the contract on day 20. That means they will have to go back to the market or see if any other bidders are still interested in the property. The shorter the finance clause, the “safer” the offer is in the eyes of the seller since they won’t lose any momentum with the property sale if anything does go wrong with your application.
When the property market is really hot (as we saw during the last couple of years), many buyers will submit an offer without any finance clause at all. So, if you want your offer to remain competitive (without risking financial losses), keep your finance clause as short as possible.
If you do not have a pre-approval, we suggest a 14-day finance clause. Once you have a pre-approved home loan, you can even reduce it to a 7-day finance period. If you choose Hunter Galloway as your mortgage broker, we will let you know the best finance clause length for your situation.
Read More: How to Make an Offer on a House
Bonus: How To Get A Finance Extension On A House Contract?
Your finance clause is due at 5 pm on the date noted on your contract. In other words:
If you have finance due Wednesday, you have until 5 pm Wednesday to go unconditional on the contract and pay the balance deposit, or decide not to proceed and get your deposit refunded.
But what happens if your home loan isn’t approved by the time your finance clause is due, and you need to ask for an extension? According to First National Real Estate Agents, “approximately 70% of the contracts we receive every year with a 14-day finance clause require an extension, “so don’t worry—it is very common to ask for an extension on a house contract.
To get a finance extension on a house contract, you need to:
- Contact your solicitor/conveyancer and ask them to formally request a finance extension from the sellers.
- You can also give a heads-up to the Real Estate agent that you will need a finance extension.
- Your solicitor will send a request in writing to the sellers requesting the extension.
- The seller’s solicitor/conveyancer will send confirmation back in writing confirming your finance extension.
The seller has options when it comes to extending the finance clause: they can either grant the extension, do nothing or terminate the contract.
In most cases, we find the sellers will extend the finance clause.
This is because they have spent the last 7 to 14 days waiting for your finance to be approved, and a simple extension of 3-4 days is a much better prospect than starting the clock again to find a new buyer.
Bonus: What Does The Contract Of Sale Contain?
A contract of sale contains information about all the parties to the contract, including their addresses and names. It includes the following:
- Certificate of the title information
- Offer date
- Warnings, such as the necessity for a smoke alarm
- Settlement date of an intended property
- The cooling-off period
- Information about furnishing and fixture
- Improvements to the property
- Property address
- Loan details, such as the terms and conditions of the payment and initial deposit
- The price of the property
- Name of a seller
- Purchasing party information and
- Information about the selling agent.
Normally, the special conditions are included in the contract of sale that can override the general conditions of the contract. Therefore, don’t sign the contract until you are fully aware of all the terms and conditions. The seller is required to attach the following with the contract of sale:
- Notification about the defects
- Warranties
- Sale conditions
- Disclosure documents
- Cooling off notice
- Warranty insurance certification
- Easement and restriction documentation
- Property certificates
- Zoning certificates and
- Plans of sewer lines
If a seller fails to include these things, the buyer has the right to cancel the contract within a certain period of time.
Bonus: Details Of Different Contracts Across Australia
Victoria
The Instruments Act 1958 states that a verbal agreement is not binding unless you honour a contract of sale in full.
Before signing a contract of sale, the seller is bound to provide the potential purchaser with the seller’s statement. Both parties sign each contract’s copy and exchange it through a real estate agent. The cooling-off period in Victoria is 3 days.
New South Wales
In New South Wales and Sydney, you cannot sell a residential property without signing a contract of sale. The seller of a strata scheme or a single freehold must also provide a valid non-compliance certificate, an occupation certificate, and a valid compliance certificate.
Moreover, the vendor and purchaser are under no obligation to honour the contract until they exchange signed copies. These copies can be exchanged in a face-to-face meeting or via mail. The cooling-off period in New South Wales is 5 days.
Queensland
In Queensland, the cooling-off period is 5 days. For the contract to be valid, it should include the following information: If the purchaser terminates the contract during a statutory cooling-off phase, they will be bound to pay a penalty of 0.25% of the purchase price. So, if you terminate the contract for a $500,000 property, you will have to pay $1,250.
Therefore, we advise that you do a property valuation independently and seek legal advice regarding cooling-off rights and the contract before signing a contract.
In Queensland, the buyer signs the contract first, and the seller only signs it if he accepts the offer. It becomes binding only after the buyer receives an acceptance notification. It is important to note that in Queensland, only lawyers can act as conveyancers.
South Australia
In South Australia, a seller is bound to provide the buyer with a Form 1 Disclosure statement before signing the contract. After both parties sign the contract, they are bound by its terms and conditions. The cooling-off period in South Australia is 2 days.
Bonus: What To Do When The Seller Backs Out Of The Contract
In rare cases, a seller can choose to back out of a contract. What do you do then? Here are some of the steps a buyer can take when a seller backs out of a contract:
- Talk to your conveyancer or lawyer, as this is a legal matter.
- The seller has to give back any initial deposit you had paid to them.
- The seller can be given an order to pay damages like money spent on building and pest reports, legal fees and any other expenses you incurred in the process.
- Sometimes, the seller can be forced to go through with the sale. In this case, you must prove that the seller just paying damages is not enough to make up for your loss if you don’t get the property. For example, if the property is so unique, you will never find another like it.
- If the seller refuses to cooperate, there is always the option of taking them to court. Now, bear in mind that this is costly and extremely time-consuming, and you may not get the results you want. However, on the flip side, a court case is also expensive and time-consuming for the seller. So, this motivates level-headed sellers to settle the dispute out of court.
Frequently Asked Questions About Signing A Contract Of Sale
Can I back out after signing a contract of sale?
Yes, but only under specific conditions. You can withdraw during the cooling-off period (though a termination penalty may apply), or if you cannot meet the conditions of your finance or building & pest clauses.
What is the cooling-off period in Queensland?
In Queensland, the cooling-off period is 5 business days starting the day the buyer receives the signed contract. If you cancel during this time, the seller may deduct a penalty of 0.25% of the purchase price from your deposit.
Who pays the deposit when signing a contract of sale?
The buyer pays the deposit. It is usually held in the Real Estate Agent’s trust account or a solicitor’s trust account until settlement is completed.
What is gazumping?
Gazumping occurs when a seller verbally accepts your offer but then signs a contract with a different buyer for a higher price. This is legal in most states (like NSW) up until contracts are formally exchanged.
Do I need a solicitor or a conveyancer when signing a contract of sale?
You need one or the other. In Queensland, only law firms can perform conveyancing work, so you will generally use a solicitor. In other states, you can choose a licenced conveyancer.
How long does settlement usually take?
A standard settlement period is 30, 60, or 90 days, but this is negotiable between the buyer and seller before signing the contract. 30 days is common in Queensland.
Can I move in before settlement?
It is rare and risky. You can request “Early Possession,” but you will likely have to pay rent to the seller, and you must accept the property in its current condition (waiving some rights).
What happens if the bank is not ready for settlement?
You may face penalty interest charged by the seller for every day you are late. If the delay is significant, the seller may have the right to terminate the contract and keep your deposit.
Talk with a Mortgage Broker Who Understands The Settlement Process.
The biggest secret to getting your home settled easily is working with an experienced Mortgage Broker. Homeowners have a much higher chance of getting their loan approved quickly (and easily) if it is submitted to the right bank.
At Hunter Galloway, we are experts and would love to help you buy a home. We can help First Home Buyers and Existing Homeowners with getting settled quickly and easily.
Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to making your home loan journey as simple as possible. If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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