Exchange of contracts is the moment a property purchase becomes legally binding. Settlement is when you actually become the legal owner. Between the two, a structured process unfolds over typically 4–8 weeks. Here is what happens and who does what.
At exchange, both parties (buyer and vendor) sign identical copies of the contract. The buyer pays the deposit — usually 5–10% of the purchase price — which is held in the agent's trust account until settlement. From this point, the deal is binding on both parties (subject to any conditions and cooling-off rights in private treaty sales).
Your conveyancer or solicitor manages the following in the period between exchange and settlement:
After exchange, submit your signed contract of sale to your lender for formal (unconditional) loan approval. The lender will commission a valuation and complete all final checks. Once approved, they prepare loan documents for you to sign. This process typically takes 1–2 weeks. If there is a finance condition in your contract, your formal approval satisfies it.
Valuation risk: If the lender's valuation comes in below the purchase price, they will only lend based on the lower value — meaning you may need to cover the shortfall from your own funds. This is most common in overheated markets or for unique properties where comparable sales are limited. Discuss this risk with your mortgage broker or lender before exchange.
You are entitled to a final inspection of the property in the days before settlement to confirm it is in the same condition as at exchange. Check that all agreed inclusions (fixtures, appliances, window coverings) are present and that no damage has occurred since your initial inspection. If there are problems, contact your conveyancer immediately — settlement can be delayed while issues are resolved.
On settlement day, your conveyancer, your lender's representatives, and the vendor's conveyancer meet (increasingly electronically via PEXA, the Property Exchange Australia platform) to simultaneously:
Once all steps complete, settlement is confirmed and the agent releases the keys to you.
After settlement, the property is legally yours. Your first loan repayment typically falls one month after settlement for monthly repayments (check your loan contract for the exact first repayment date). Set up your repayment direct debit immediately. Also update home and contents insurance — most policies require you to update them within days of taking ownership.
The difference and what each means for your purchase timing.
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