What Not to Do When Refinancing: Settlement Steps

The refinance settlement process is where your new loan replaces your old one, your existing lender gets paid out, and any equity you're accessing lands in your account.

Most refinance settlements in Malvern take between four to eight weeks from application to completion, but that timeline depends on how quickly you respond to requests, whether your property valuation comes back as expected, and if there are any title issues that need resolving. Missing a deadline or submitting incomplete documents can add weeks to the process, and if your fixed rate period is ending during that time, you could roll onto a higher variable rate before the new loan settles.

The Discharge Authority and Payout Figure

Your new lender will request a discharge authority from your current lender once your application is approved. This document confirms the exact payout amount, including any remaining loan balance, accrued interest, and discharge fees. Your current lender has up to 14 days to provide this figure, though most respond within a week.

If you're refinancing from a fixed rate loan before the term ends, break costs will be included in the payout figure. These costs vary depending on how much time remains on your fixed term and how far rates have moved since you locked in. In our experience, borrowers sometimes underestimate break costs and find their refinance savings reduced or eliminated entirely. If you're coming off a fixed rate at the natural end of your term, there's no break cost, and the timing is usually more straightforward.

What Happens Between Approval and Settlement

Once your refinance application is formally approved, your new lender will book a settlement date with your current lender. You'll receive a settlement statement showing the exact figures: the payout amount to your old lender, any equity you're releasing, and what remains on the new loan amount.

During this period, do not change jobs, apply for other credit, or make large purchases on credit. Lenders can and do re-verify employment and credit files right before settlement, and any changes can delay or derail the process. One of the more frustrating scenarios we see is when someone finances a car or takes on a business loan between approval and settlement, only to have their home loan approval withdrawn because their serviceability no longer stacks up.

Settlement Day and the Transfer of Funds

On settlement day, your new lender transfers the payout amount directly to your old lender. Your old lender then discharges the mortgage, which is registered on your property title. If you're accessing equity, those funds are either paid to you or directed to a third party, depending on what you specified in your application.

The discharge can take one to three business days to process with Land Registry Services in Victoria, so your old lender's mortgage won't disappear from the title immediately. During this gap, both mortgages are technically registered, but your old loan is marked as discharged and you're only paying interest on the new loan.

If you have an offset account or redraw facility with your old lender, move those funds before settlement day. Some lenders freeze accounts as soon as the discharge is processed, and it can take weeks to retrieve your money if you leave it sitting there.

Timing Around Your Fixed Rate Expiry

Malvern residents refinancing as a fixed rate period ends need to time the process carefully. If your fixed term ends on the 15th of the month and your new loan doesn't settle until the 20th, you'll spend five days on your old lender's variable rate, which could be significantly higher than the rate you locked in years ago.

Consider a borrower with a loan amount of $800,000 whose fixed rate ends in June. They submit a refinance application in early April, aiming to settle before the fixed term expires. The valuation comes back $50,000 below their estimate, and the lender requires additional documentation to support their income. By the time everything is approved, settlement is pushed to mid-July. They've now spent six weeks on a variable interest rate that's 1.5% higher than their new loan, which adds around $1,500 in interest they could have avoided with an earlier start.

Common Delays and How to Avoid Them

Property valuations are one of the most common sources of delay. If the valuer assesses your Malvern property lower than expected, your loan-to-value ratio changes, and you may need to reduce the loan amount or provide additional funds to settle. Malvern's proximity to Glenferrie Road and the Malvern Central Shopping Centre generally supports strong valuations, but individual property conditions and recent comparable sales will always determine the outcome.

Incomplete paperwork is another frequent issue. If your new lender requests payslips, bank statements, or proof of rental income, send them the same day. Waiting even 48 hours can push your settlement date out by a week or more, depending on how tight the lender's schedule is.

Title issues, such as an unregistered discharge from a previous refinance or a caveat you didn't know existed, can also stall settlement. Your conveyancer or solicitor should identify these during their title search, but if something unexpected appears, it can take weeks to resolve.

What You'll Pay on Settlement Day

Your settlement statement will include the payout to your old lender, any discharge fees they charge, government fees for registering and discharging the mortgage, and conveyancing or solicitor costs. Discharge fees typically range from $150 to $400, and registration fees in Victoria are usually around $120.

If you're accessing equity, the amount you receive will be the total equity released minus any fees or costs deducted at settlement. Some borrowers expect to receive the full amount and are surprised when settlement costs reduce what lands in their account. Your broker should walk you through the settlement statement before the day arrives so there are no surprises.

After Settlement: Confirming the Discharge

Once settlement is complete, request a copy of the discharge of mortgage from your old lender. This document confirms the loan is fully paid and the mortgage has been removed from your property title. You can also order a title search through Land Registry Services to verify the discharge is registered.

If you're setting up an offset account or redraw facility with your new lender, make sure those features are active and linked correctly. Some lenders take a few days to activate offset accounts after settlement, and any delay means you're paying interest on the full loan amount when you could be reducing it with your savings.

Call one of our team or book an appointment at a time that works for you. We'll walk through your refinance timeline, help you avoid common delays, and make sure your settlement process in Malvern runs without unnecessary holdups or costs.

Frequently Asked Questions