Closing the deal as a first home buyer

Preparation and readiness in the weeks leading up to settlement can be the difference between make or break for first home buyers.

Have you been looking for the home of your dreams or an investment property for a while now?

If you’re across the costs associated with homeownership, the government rebates available and your loan has been pre-approved by your lender—you’re part way there.

The finishing line draws near when you locate the ideal place and put an offer on the table. But, what takes place before you close the deal and collect the keys?

We list the steps leading up to settlement, but some of these may differ state-to-state and when buying off the plan.

The holding deposit

If you purchase a property via a private treaty sale and the seller accepts your offer, you’ll often pay a small holding deposit.

You’ll get this back if someone ‘gazumps’ you, which is when someone makes a higher offer and the seller accepts. The holding deposit shows you’re serious, but it doesn’t secure the property, which may remain on the market until contracts are formally exchanged.

If you buy at auction, a holding deposit will not be required but your main deposit will be, so you’ll need a bank cheque or your cheque book ready to go.

When purchasing at auction, you’re fully committed to buying the property the second you put forward the highest bid and contracts are exchanged. This is why finalising any building/pest inspections and knowing what is required from your lender is important ahead of auction day.

Exchanging contracts

You and the seller enter into a legally binding agreement when both parties sign and exchange contracts.

If it’s a private treaty sale, often there’s a cooling-off period of several days. If you haven’t already, this gives you a small window to get formal loan approval from your lender and complete any building/pest inspections, or request a strata report if you’re buying a townhouse or apartment.

Formal loan approval

You may have attained pre-approval on a loan but you’ll need formal approval before the end of the cooling-off period.

Your lender will organise a valuation of the property as part of the process and will confirm whether lender’s mortgage insurance is required. Usually you’ll only pay this if you’re borrowing more than 80% of the property purchase price.

Building and contents insurance

If your lender formally approves your finances, they may also require that you take out building insurance from the date contracts are exchanged to safeguard their and your interest in the property.

If you’re buying an apartment, you’ll need to arrange a Certificate of Currency from the Body Corporate’s insurer to make sure the property is adequately covered.

The cooling-off period

If the building/pest inspection raises serious concerns or your finances are knocked back, you can pull out of the contract before the cooling-off period expires, but it’s likely you’ll lose your holding deposit.

If all goes well, you’ll sign on the dotted line and pay the full deposit—typically a minimum of 10% to 20% of the purchase price.

Remember, cooling-off periods do not apply if you’re buying at auction.


Conveyancing is the legal transfer of property from the seller to the buyer. As part of this process your solicitor or conveyancer will do most of the legal legwork, including Transfer of Land, Identification of Certificate of Title, stamp duty application and the Authority to Proceed to Settlement.

They will contact the bank, the seller’s solicitor and any relevant parties to arrange dates, times and the necessary payments. A pre-settlement inspection may also be organised to ensure the property is in the same condition as when it was purchased.


Normally settlement will be 30 to 90 days1 after contracts are exchanged. At this time, you’ll pay the balance of the purchase price (including stamp duty) using your loan, or outright if you have the funds.

Then, voila – the keys are yours and you can celebrate the successful purchase of your very first home!

For a quick reference and to make sure you’ve got all your bases covered, download our handy checklist.


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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.