Congratulations! You’ve found your dream home and your offer has been accepted. Now comes the waiting period before settlement, and while it might be tempting to celebrate and start making changes, there are several crucial mistakes that could jeopardize your entire purchase. Here’s what you absolutely must avoid during this critical time.
1. Don’t Make Any Major Purchases
This includes cars, furniture, appliances, or anything that requires financing.
Your lender will likely run a final credit check just before settlement, and any new debt can dramatically change your debt-to-income ratio. That new car loan or furniture financing could push you over the threshold and cause your mortgage approval to be withdrawn at the last minute.
What to do instead: Wait until after settlement keys are in your hand before making any major purchases, even if you’re getting a “great deal” that won’t last.
2. Don’t Change Jobs or Income Structure
Avoid switching employers, going from salary to commission, or becoming self-employed.
Lenders need to verify stable income right up until settlement. Even if your new job pays more, the change in employment status can trigger additional verification requirements or, in worst cases, loan denial.
What to do instead: If you must change jobs, speak with your lender immediately to understand the implications and required documentation.
3. Don’t Move Your Money Around Unnecessarily
Avoid transferring large sums between accounts or depositing cash.
Lenders need to track the source of all funds used for your deposit and settlement costs. Large or unusual transactions can trigger additional documentation requirements and potentially delay settlement.
What to do instead: Keep your money in the same accounts and maintain normal banking patterns. If you must move money, document everything and inform your lender.
4. Don’t Apply for New Credit Cards or Loans
This includes store credit cards, personal loans, or even checking your credit score too frequently.
Each credit application creates a “hard inquiry” on your credit report, which can lower your credit score. Multiple inquiries can signal financial stress to lenders and impact your mortgage approval.
What to do instead: Put all credit applications on hold until after settlement, even for “pre-approved” offers or store discounts.
5. Don’t Skip the Final Inspection
Never assume everything is the same as when you first viewed the property.
The final inspection (usually 24-48 hours before settlement) is your last chance to ensure the property is in the agreed-upon condition. Skipping this step could mean discovering problems after you own the property, with no recourse against the seller.
What to do instead: Schedule and attend the final inspection, checking that any agreed-upon repairs were completed and no new issues have arisen.
6. Don’t Forget to Arrange Utilities and Insurance
Failing to set up essential services can create settlement day complications.
You’ll need buildings insurance from settlement day, and you’ll want utilities connected for your move-in. Some lenders require proof of insurance before they’ll release funds.
What to do instead: Contact utility companies at least a week before settlement, and arrange building insurance to commence from settlement date. Provide insurance details to your lender promptly.
7. Don’t Make Assumptions About Settlement Requirements
Never assume you know what documents or funds you’ll need without confirming.
Settlement requirements can change, and the amount needed may be different from initial estimates due to rate changes, additional fees, or adjustments. Showing up unprepared can delay or cancel settlement.
What to do instead: Contact your settlement agent or solicitor at least a few days before settlement to confirm exactly what you need to bring, including the specific amount and form of payment required.
The Bottom Line
The period between contract signing and settlement is not the time for major life changes or financial decisions. Your mortgage approval is conditional until the moment you receive your keys, and seemingly innocent actions can have serious consequences.
Remember: When in doubt, ask your lender, mortgage broker, or settlement agent before making any decisions that could affect your finances or living situation.
Your Settlement Checklist
To help you stay on track, here’s what you SHOULD be doing:
- Maintain normal spending and banking patterns
- Keep the same job and income structure
- Respond promptly to any lender requests for documentation
- Schedule your final inspection
- Arrange insurance and utilities
- Confirm settlement requirements with your agent
- Keep all relevant parties informed of any unavoidable changes
By avoiding these common mistakes, you’ll help ensure your settlement proceeds smoothly and you can finally get the keys to your new home. The wait will be worth it when you’re holding those keys and walking through the door of your new property!
Need help navigating the settlement process? Contact us for expert guidance and support throughout your property purchase journey.