Refinance settlement is the day your new lender pays out your old loan and your mortgage officially moves across.
Most borrowers assume the hard work is done once their refinance application is approved. The settlement stage is where timing, paperwork, and coordination between lenders determine whether the switch happens smoothly or gets delayed by weeks. Understanding what happens during this final stage means you can prepare for it properly and avoid last-minute complications that push back your settlement date or cost you extra interest on your old loan.
What happens between refinance approval and settlement
Once your refinance is formally approved, your new lender books a settlement date, usually two to six weeks out. Your solicitor or conveyancer receives the loan documents and prepares the discharge authority for your existing lender. The new lender orders a property valuation if they have not already done so, and checks that no new defaults or credit issues have appeared since approval. About a week before settlement, your new lender confirms the payout figure with your old lender and finalises the amount they will transfer on settlement day.
If your property is in a strata scheme or community title, your conveyancer will request a body corporate certificate to confirm levies are paid and no special resolutions affect the property. If there are delays obtaining this certificate, settlement can be pushed back. Your old lender will also require at least five business days' notice to prepare the discharge of mortgage, so timing needs to be coordinated carefully between all parties.
Documents you need to organise before settlement
You will need to provide proof of home and contents insurance with your name listed as the insured party, covering the full replacement value of the property. Your new lender will not settle without this. If you are consolidating other debts into your refinance, you may need to provide final payout figures for those debts as well, particularly if they are secured against the property.
In Queensland, if your property is in a community title scheme, body corporate records and levy certificates are required before settlement. If there are joint borrowers, all parties need to sign the loan documents in the presence of a witness, and those documents must be returned to the lender at least a week before the scheduled settlement date. If you are refinancing an investment property, your conveyancer will also check that tenant details are recorded correctly and that any existing leases are noted on the title.
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How settlement day works and what changes immediately
On settlement day, your new lender transfers funds electronically to your old lender, who then releases the mortgage over your property. This usually happens between 10am and 2pm, though exact timing depends on when both lenders process the transaction through PEXA, the electronic settlement platform used across Australia. Once your old loan is paid out, your new loan becomes active and interest starts accruing under the new rate and terms.
If you have an offset account or redraw facility with your new lender, those features are available from settlement day, but it can take 24 to 48 hours for your online banking access to be fully activated. Your first mortgage repayment on the new loan is usually due about a month after settlement. If you were paying fortnightly on your old loan and want to continue that arrangement, you need to set it up with your new lender directly, as most refinances default to monthly repayments unless you specify otherwise.
What can delay settlement and how to avoid it
The most common cause of settlement delays is missing or incomplete insurance documentation. Your policy needs to show your name, the property address, and a replacement value that matches or exceeds the lender's requirement. If the insurance company issues the policy in a format the lender does not accept, you will need to request an updated certificate of currency, which can take several days.
Another frequent delay occurs when borrowers fail to return signed loan documents on time. If documents are signed incorrectly, witnessed improperly, or returned too close to the settlement date, the lender may not have enough time to process them and will push the settlement date back. In Queensland, if you are refinancing a property with a pool or non-standard structures like a granny flat, some lenders require additional inspection reports or compliance certificates, which can add a week or more to the process if not arranged early.
If you are coming off a fixed rate period and refinancing to avoid reverting to a higher variable rate, timing is particularly important. Settlement needs to occur before your fixed term expires, otherwise you may pay a higher rate for the period between expiry and settlement. If your fixed rate period is ending soon, start your refinance process at least eight weeks before the expiry date to allow time for approval and settlement without overlap.
Costs that are deducted at settlement
Your new lender will deduct application fees, valuation fees, and any lender establishment costs from the loan amount at settlement. If you are borrowing additional funds to consolidate debt or access equity, the net amount you receive will be the total loan minus these costs and the payout figure for your old loan. Your conveyancer or solicitor will also deduct their fees, government registration charges, and any body corporate certificate fees from the settlement proceeds.
In Queensland, mortgage registration fees are currently around $200, and discharge fees charged by your old lender typically range from $300 to $500. If you are refinancing out of a fixed rate loan before the fixed term ends, break costs may apply, and these are usually deducted by your old lender from the payout amount. If break costs are substantial, some borrowers choose to delay settlement until closer to the fixed rate expiry to reduce the penalty, but this needs to be weighed against the potential savings from moving to a lower rate sooner.
What to do if settlement is delayed
If your settlement is delayed, contact your old lender immediately to extend the payout quote, as these are usually only valid for 14 days. If the quote expires, your old lender will issue a new one with an updated interest calculation, which may differ from the original payout figure. This can cause a shortfall on settlement day if your new lender has already prepared the transfer based on the old payout figure.
You should also notify your new lender and conveyancer as soon as you are aware of any delay. If the delay is caused by something within your control, such as missing documents, provide them immediately. If the delay is on the lender's side or due to body corporate or title issues, your conveyancer can request an extension from both lenders and reschedule the settlement date. Most refinances that are delayed by a week or two can still proceed without needing to restart the approval process, provided your financial circumstances have not changed.
When your first repayment is due and how to manage the transition
Your first repayment to your new lender is typically due one month after settlement. If you settle on the 15th of the month, your repayments will usually fall on the 15th of each following month. Some lenders allow you to choose a preferred repayment date during the application process, which can be helpful if you want repayments to align with your pay cycle.
During the transition, make sure you cancel any direct debits linked to your old loan, as your old lender will attempt to collect repayments until the discharge is finalised. If a repayment is taken after your loan is paid out, it will need to be refunded, which can take up to ten business days. If you were making extra repayments or using a redraw facility on your old loan, check with your old lender whether any residual funds remain in that account after settlement, as they will not automatically transfer to your new loan.
If you are moving from a fixed rate loan to a variable rate loan or vice versa, your repayment amount will likely change. Review your new repayment schedule carefully and adjust your budget accordingly. If you are consolidating other debts into your mortgage as part of the refinance, confirm that those debts are paid out at settlement and close the associated accounts to avoid accruing further interest or fees.
Refinancing is not a one-time event. Loan features, interest rates, and your own financial circumstances change over time, which is why periodic reviews are valuable. A loan health check every couple of years helps identify whether your current loan still suits your needs or whether another refinance could improve your position.
Call one of our team or book an appointment at a time that works for you. We work with clients across Queensland and can coordinate the full settlement process on your behalf, from application through to discharge and activation of your new loan.
Frequently Asked Questions
How long does refinance settlement take after approval?
Refinance settlement usually occurs two to six weeks after formal approval. The timeframe depends on how quickly you return signed documents, how long the valuation and insurance take to finalise, and whether any delays occur with body corporate certificates or title searches.
What documents do I need to provide before refinance settlement?
You need proof of home and contents insurance covering the full replacement value, signed loan documents witnessed correctly, and body corporate certificates if your property is in a community title scheme. If you are consolidating debts, you may also need to provide payout figures for those loans.
When is my first repayment due after refinancing?
Your first repayment to your new lender is typically due one month after settlement. If you settle on the 15th of the month, your repayments will usually fall on the 15th of each following month unless you arrange a different repayment date with your lender.
What happens on refinance settlement day?
Your new lender transfers funds electronically to your old lender, who then releases the mortgage over your property. This usually happens between 10am and 2pm through the PEXA platform, and once complete, your new loan becomes active and interest starts accruing under the new terms.
What costs are deducted at refinance settlement?
Your new lender deducts application fees, valuation fees, and establishment costs from the loan amount. Your conveyancer deducts their fees, mortgage registration charges (around $200 in Queensland), and any body corporate certificate fees. Your old lender may also charge a discharge fee of $300 to $500.
