What Actually Happens Between Unconditional Approval and Settlement

The approval email feels like the finish line. It is not. It is the starting gun on a fortnight of admin that almost nobody explains to you beforehand, and it is the part of the process where perfectly good purchases get stressful for no good reason.

Here is what actually happens between unconditional approval and money moving.

Unconditional approval means the lender has assessed your income, your credit, the property valuation and everything else it needed to, and it is satisfied. It has agreed to lend.

What it has not done is release any money. Before it does that, it wants a specific set of things in front of it, and it wants them by a deadline it sets working backwards from your settlement date.

That list has a name at most lenders. Outstanding items. It lands by email, often late in the day, and it comes with a clock attached.

It varies by lender and by deal, but the same items turn up again and again.

Signed loan documents, returned and verified. Identity verification completed. A certificate of currency for building insurance on every security property. The name and contact details of your solicitor or conveyancer. A nominated bank account for any surplus funds, or the account any shortfall will be drawn from. Confirmation that the PEXA workspace exists and the lender has been invited into it. Rates and water notices so the adjustments can be calculated.

If you are buying with a guarantor, or the loan is split across more than one property, or there is a construction component, the list gets longer.

None of it is unreasonable. It is just that nobody sits you down beforehand and tells you it is coming.

The outstanding items list gets sent to one place. Usually the broker, sometimes the borrower.

But the items on it belong to three different people. Some only you can supply, like the insurance certificate. Some only the broker can sort out with the lender. And at least one of them, on a purchase, sits with your solicitor or conveyancer, because they are the ones working in the PEXA workspace.

PEXA is the electronic settlement platform most Australian property transactions now run through. On a purchase, the incoming purchaser's representative is typically the one who either creates the workspace or accepts the invitation into it and then invites your lender. Practice varies between firms and states, which is exactly why it is worth asking the direct question rather than assuming it has been done.

Nobody sends the solicitor their own tidy version of that list. It all arrives in one place, with one deadline, and someone has to sort out who owns what.

Lenders do not just ask nicely. They chase.

At most lenders, items still outstanding a few days before settlement will trigger a phone call. Closer in, if things are still missing, the lender can push a request through PEXA to move the settlement date. That is not a threat, it is just what the system does when it is not ready.

A rescheduled settlement is not the end of the world, but it costs you. Penalty interest can apply under the contract, removalists need rebooking, and if you are selling and buying on the same day, one moving date drags the other with it.

This is the single item that trips up more purchases than any other, because most people have never had to produce one before.

A certificate of currency is a document from your insurer proving the building is insured and the policy is active. Your lender needs it because it is about to have a mortgage over a property it has never seen.

What it needs to show, generally, is the insured property address, the type of cover, the policy period, and your lender named as the mortgagee or interested party. NAB, for example, sets out exactly that on its own certificate of currency page. Get one of those details wrong and the certificate comes back, which is where the delays come from. Not the insurance. The paperwork about the insurance.

Two extra things worth knowing.

If the loan is secured over more than one property, you may need a certificate for each one, or a single combined certificate that clearly covers both. A certificate that covers one address when the lender is taking security over two is not enough.

And if the property is in a strata or body corporate scheme, the building insurance usually sits with the owners corporation, so what your lender wants is a copy of that policy's certificate rather than one in your own name.

This is where it gets state specific, and it surprises people.

In Queensland, under the standard REIQ contract, risk passes to the buyer at 5pm on the first business day after the contract date. Not settlement. The contract date. You can be carrying the risk on a house you do not yet own and cannot yet enter.

In New South Wales, risk stays with the vendor until completion or possession under section 66K of the Conveyancing Act 1919, with rescission and price abatement provisions if the property is materially damaged in the meantime.

In Victoria, the vendor carries the risk until settlement and has to hand the property over in the same condition it was in at the day of sale, fair wear and tear excepted, under the standard contract's general conditions.

Regardless of which state you are in, your lender wants cover in place before it settles. So the practical answer is the same everywhere. Sort the insurance early, and in Queensland sort it immediately.

Two weeks out, ask your broker for the outstanding items list and ask who owns each line. Not whether it is under control. Who is doing it.

Get the insurance quote done before you need the certificate, so producing it is a five minute job rather than a new task.

Get your solicitor's full details across to your broker the day you engage them, not when the lender asks.

And when something lands in your inbox from the lender or the solicitor, answer it that day. Almost every settlement that goes sideways does so because a document sat in someone's inbox over a weekend.

Settled recently, or currently in the middle of it? What was the item on your list that nobody warned you about?