How to Manage Refinancing Settlement Procedures

Refinancing settlement is the formal process where your new lender pays out your existing loan and registers the new mortgage against your property.

The period between approval and settlement typically runs 30 to 45 days, though it can be shorter or longer depending on your lender and whether you're also switching properties or just changing loans on the same property. During this time, your new lender prepares settlement documents, conducts a property valuation, and coordinates with your existing lender to confirm the exact payout figure. You'll need to review and sign loan documents, arrange property and income insurance if required, and ensure funds are ready for any costs due at settlement. In Kew, where many properties are heritage-listed or in covenant areas, this timeline can extend if the valuation requires additional checks or if planning overlays affect the property assessment.

What Happens Between Approval and Settlement Day

Your new lender orders a property valuation to confirm the security value, requests a payout figure from your current lender, and prepares the mortgage discharge and registration documents. You'll receive a loan contract and settlement statement showing the exact figures, including any break costs if you're exiting a fixed rate early, government fees, and lender charges. Your solicitor or conveyancer, if you've engaged one, will review the documents and coordinate with both lenders to ensure the discharge and new mortgage are registered on the same day.

Consider a Kew homeowner refinancing a loan secured against a period property near Studley Park. The valuation takes an extra week because the valuer needs to find comparable sales for a property with heritage controls. The payout figure from the existing lender includes a break cost because there are eight months remaining on a fixed rate. The new lender confirms the valuation supports the loan amount, and settlement is scheduled for six weeks after approval. The homeowner signs documents electronically, and the solicitor coordinates the discharge and registration to avoid any gap where neither lender holds security.

Costs You'll Pay at Refinance Settlement

Settlement costs include the discharge fee charged by your outgoing lender, usually between $150 and $400, and government registration fees for discharging the old mortgage and registering the new one. In Victoria, the discharge fee is around $120, and the registration fee for a new mortgage is approximately $120. Your new lender may charge an application fee, valuation fee, or settlement fee, though many lenders waive or reduce these during promotional periods. If you're exiting a fixed rate before the term ends, break costs can add several thousand dollars depending on how much rates have moved since you locked in.

You won't need to budget for stamp duty when refinancing the same property, as duty only applies when ownership changes. If you're releasing equity to purchase an investment property at the same time, that purchase will attract stamp duty, but the refinance itself remains exempt. Lender legal fees are typically included in the application or settlement fee, so you won't see a separate charge unless you engage your own solicitor to review the documents.

Documents You'll Need to Sign Before Settlement

Your new lender will send a loan contract, mortgage document, and direct debit authority for repayments. If you're refinancing with a partner or co-borrower, both parties must sign. Some lenders allow electronic signing, while others require wet signatures and certified copies of identification. You'll also sign a privacy consent allowing the new lender to contact your existing lender for the payout figure, and an authority for the new lender to register the mortgage on the Victorian Land Titles Register.

If you're accessing equity as part of the refinance, you'll sign a declaration confirming the purpose of the additional funds. Lenders require this for responsible lending obligations, particularly if you're using equity to purchase another property or consolidate debt. In our experience, missing signatures or incorrectly completed forms are the most common cause of settlement delays, so it's worth reviewing every page carefully before returning them.

How the Payout and Settlement Are Coordinated

On settlement day, your new lender transfers the payout amount directly to your existing lender, and both lenders lodge documents with Land Use Victoria to discharge the old mortgage and register the new one. The payout figure is calculated to the exact settlement date and includes any accrued interest, outstanding fees, and break costs if applicable. If your loan balance fluctuates between the payout quote and settlement, such as when an offset account is linked, the final figure may differ slightly from the initial estimate.

Your existing lender typically provides a payout figure valid for 30 days. If settlement extends beyond that period, you'll need to request an updated figure. In a scenario where a Kew resident is refinancing to access equity for an investment property, the new lender advances a higher loan amount than the payout figure, and the difference is deposited into the borrower's nominated account within one to three business days after settlement. The borrower uses those funds for the deposit and purchase costs on the investment property, while the new loan is secured against the Kew home.

What to Do If Settlement Is Delayed

Settlement delays occur when valuations take longer than expected, when the payout figure is disputed, or when document signing is incomplete. If the delay originates with the lender, you can request an extension on your approval or lock in your interest rate until settlement proceeds. If the delay is on your side, such as missing documents or insufficient funds for settlement costs, contact your broker as soon as possible to resolve the issue before the lender withdraws the offer.

If you're coming off a fixed rate and settlement is delayed, you may revert to your existing lender's variable rate for a period. This can be costly if the reversion rate is significantly higher than the rate you've locked in with the new lender. In some cases, it's worth paying a small fee to extend the settlement date rather than accepting a higher rate for even a few weeks. If you're concerned about timing, a loan health check before starting the refinance process can identify potential issues early and give you more control over the timeline.

How Offset Accounts and Redraw Are Transferred

When you refinance, your existing offset account is closed once the loan is paid out, and any balance is transferred to your nominated transaction account. If your new loan includes an offset facility, you'll need to set up the account separately and transfer funds into it after settlement. Redraw balances work differently: any extra repayments you've made are applied to the payout figure, reducing the amount your new lender needs to transfer. You won't receive those funds separately unless you specifically request a higher loan amount to access them.

In Kew, where property values are high and many homeowners have built substantial equity, it's common to refinance and access redraw or offset balances to fund renovations or investment opportunities. If you're planning to use those funds for a specific purpose, discuss the structure with your broker before settlement so the loan amount and offset account are configured to support your plans.

Call one of our team or book an appointment at a time that works for you to discuss your refinance settlement timeline and ensure every step is handled correctly.

Frequently Asked Questions