What Happens During Refinance Settlement
Refinance settlement is the day your new lender pays out your old lender and takes security over your property. It typically occurs 4 to 6 weeks after formal loan approval, though timing depends on whether valuations, documentation, or title searches reveal complications.
For sole traders in Sydney, settlement involves more moving parts than it does for salaried employees because your ABN is often linked to offset accounts, redraw facilities, or commercial products bundled with your home loan. Your old lender discharges the mortgage on the same day your new lender registers theirs. Both processes run concurrently through your solicitor or conveyancer, and any delay on either side can push settlement back by days or weeks.
Consider a sole trader who refinances to access equity for a work vehicle. If their current loan includes a redraw facility with funds set aside for quarterly BAS payments, those funds need to be withdrawn before settlement. Once the old loan is discharged, access to redraw disappears. That money does not automatically transfer to the new lender. If the refinance is structured to release equity, the additional funds are usually available within 24 to 48 hours after settlement, provided the new lender has confirmed registration of the mortgage on title.
Documents Your Solicitor Needs Before Settlement Day
Your solicitor or conveyancer will request a discharge authority from your current lender, a payout figure valid for the settlement date, and confirmation that the new lender's funds are ready to be released. They also need your identification, proof of property insurance, and any documents related to caveats, easements, or second mortgages on the title.
Sole traders often have additional layers. If your home loan is cross-collateralised with a commercial property or linked to a business overdraft, your solicitor must confirm that the discharge authority covers all securities. We regularly see sole traders assume their home loan is standalone, only to discover at settlement that the lender holds a second mortgage over the property to secure a business loan. That second mortgage must be discharged or refinanced separately, and if it is not identified early, settlement can be delayed by weeks while the lender prepares amended documentation.
How Payout Figures Are Calculated and Why Timing Matters
A payout figure includes your outstanding loan balance, any accrued interest up to the settlement date, and discharge or administration fees charged by your current lender. If you are coming off a fixed rate period and breaking the loan early, break costs are added to the payout figure. These can range from a few hundred dollars to tens of thousands, depending on how much time remains on the fixed term and how far rates have moved since you locked in.
Payout figures are valid for a specific date, usually 7 to 10 days from the date of issue. If settlement is delayed, your solicitor must request an updated figure because interest accrues daily. For sole traders with irregular income patterns, this can create cashflow friction. If you are relying on a lump sum payment from a client to cover settlement costs, and that payment arrives a week late, your payout figure may no longer be accurate. The new lender will not release funds until the payout figure is confirmed, and the old lender will not discharge the mortgage until they receive the exact amount owing.
If you are refinancing a loan that includes an offset account, check whether any pending transactions will clear before settlement. We have seen sole traders caught out when a direct debit for business insurance clears on settlement day, reducing the offset balance and increasing the loan balance by the same amount. That changes the payout figure, and if the new lender has already prepared the settlement statement, the transaction may need to be rescheduled.
What Happens to Your Existing Offset and Redraw Facilities
Once your old loan is discharged, your offset account is closed and any balance is transferred to a nominated account, usually within 1 to 3 business days. Redraw facilities are frozen as soon as the lender receives notice of the refinance, which can occur weeks before settlement. If you need access to those funds, withdraw them before your solicitor issues the discharge authority.
For sole traders who use offset accounts to manage tax obligations or quarterly expenses, this is not a minor inconvenience. If your offset account holds funds earmarked for GST, superannuation, or income tax, and those funds are tied up during settlement, you may need to arrange short-term cashflow support to meet your obligations. Your new lender may offer an offset account as part of the refinancing package, but it will not be active until after settlement, and the account number will be different. Any direct debits or automated transfers linked to the old offset account must be updated manually.
How Long It Takes for the New Lender to Register the Mortgage
In New South Wales, mortgage registration occurs electronically through the Electronic Lodgement Network Operator (ELNO), typically within 24 to 48 hours after settlement. Once the new lender confirms registration, they release any additional funds if you have refinanced to access equity. Until registration is complete, the new lender holds the funds in trust.
Delays occur when the title search reveals an unresolved caveat, an outdated property description, or a second mortgage that was not disclosed during the application. For sole traders who have used their property as security for multiple business arrangements, this is a common issue. If a supplier or contractor lodged a caveat over a disputed invoice, that caveat must be removed before the new lender can register their mortgage. The process involves negotiation, legal documentation, and in some cases, a court order. Settlement cannot proceed until the title is clear.
What to Do If Settlement Is Delayed
If settlement is delayed, your current lender continues to charge interest on the outstanding balance, and your new lender may withdraw the approval if the delay extends beyond their policy timeframe, usually 90 days from formal approval. Your solicitor will request an updated payout figure from your old lender and a revised settlement date from your new lender.
For sole traders, delays often stem from income verification rather than property issues. If your new lender conducts a pre-settlement review and your most recent BAS statement shows a significant drop in turnover, they may request updated financials or an explanation. If your accountant is unavailable or your records are not current, this can push settlement back by weeks. The solution is to keep your financial documentation current throughout the refinance process, not just at the application stage. If your turnover fluctuates seasonally, provide context in writing before the lender requests it.
Costs You Will Pay on Settlement Day
Settlement costs include discharge fees charged by your old lender, typically between $300 and $500, plus solicitor or conveyancer fees, which range from $800 to $1,500 depending on the complexity of the transaction. If you are accessing equity, your new lender may charge a valuation fee, usually between $200 and $400, and a loan establishment fee, which varies by lender but typically sits between $400 and $800.
Sole traders should also account for title search fees, mortgage registration fees, and any government charges related to updating the land title. In New South Wales, mortgage registration fees are approximately $150. If your refinance involves a property valuation, and the valuer identifies building work completed without council approval, you may need to obtain retrospective approval before settlement. This adds legal costs, council fees, and time. If you have renovated your home office or converted a garage into a workspace, check with your local council before applying to refinance your home loan.
How to Prepare Your Finances Before Settlement
Confirm that your property insurance is current and that the policy reflects the new loan amount. Your new lender will not settle unless they receive confirmation of insurance, and if your policy has lapsed or the sum insured is lower than the loan amount, you will need to update it before settlement.
For sole traders, this often means adjusting the policy to reflect business use of the property. If you operate from home, your standard home and contents policy may not cover business equipment, stock, or public liability. Your lender does not require this coverage, but if your policy excludes business use and you make a claim, the insurer may refuse to pay. Speak to your insurance broker before settlement, not after.
Ensure that any funds you need for settlement are in an accessible account at least 48 hours before the scheduled date. If you are transferring funds from a term deposit or a business savings account, allow time for the transfer to clear. If your new lender is releasing equity, confirm when those funds will be available and whether they will be paid directly to you or held in a trust account until conditions are met.
Call one of our team or book an appointment at a time that works for you. We will walk you through each stage of the settlement process, coordinate with your solicitor and lenders, and make sure nothing is overlooked between approval and drawdown.
Frequently Asked Questions
What happens to my offset account when I refinance my home loan?
Your offset account is closed once your old loan is discharged, and any balance is transferred to a nominated account within 1 to 3 business days. Your new lender may offer a new offset account, but it will have a different account number and will not be active until after settlement.
How long does refinance settlement take in New South Wales?
Settlement typically occurs 4 to 6 weeks after formal loan approval. Mortgage registration in New South Wales is completed electronically within 24 to 48 hours after settlement, and additional funds are usually available shortly after registration is confirmed.
What costs do I pay on settlement day when refinancing?
You will pay discharge fees to your old lender, typically $300 to $500, solicitor or conveyancer fees of $800 to $1,500, and potentially valuation and establishment fees charged by your new lender. Mortgage registration fees in New South Wales are approximately $150.
Can I access my redraw funds during the refinance process?
Redraw facilities are usually frozen as soon as your lender receives notice of the refinance, which can occur weeks before settlement. Withdraw any funds you need before your solicitor issues the discharge authority, as access disappears once the old loan is discharged.
What happens if refinance settlement is delayed?
Your current lender continues to charge interest on the outstanding balance, and your new lender may withdraw approval if the delay exceeds their policy timeframe, usually 90 days. Your solicitor will request updated payout figures and work with both lenders to reschedule settlement.
