Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Property Settlement and Home Loans
Property settlement after separation involves two key finance decisions: what happens to the existing joint mortgage, and how each party funds their next housing arrangement. Getting the finance right at settlement time has lasting consequences, for your mortgage rate, your new property's equity, and your ability to move forward cleanly.
I get involved in property settlements at two stages: before the settlement is finalised (to assess what's achievable), and at execution (to actually arrange the finance). Being involved early is far better. A consent order that directs one party to refinance the mortgage into their name within 60 days, but they discover at day 50 that they can't service the loan, creates a legal and financial crisis. A quick pre-settlement capacity assessment prevents this entirely.
The Two Finance Decisions at Settlement
1. Refinancing the Joint Mortgage (One Party Keeps the Home)
If one party is keeping the family home, the joint mortgage must be refinanced into their name only. This involves:
- Assessment of single-income borrowing capacity
- New loan = existing mortgage balance + buyout payment to departing party
- Independent valuation to confirm property value and LVR
- Title transfer to sole name (stamp duty exempt under court order in most states)
2. New Purchase After Selling the Family Home
If the family home is sold and proceeds divided, each party uses their settlement proceeds toward a new independent purchase. Settlement proceeds as a deposit are treated as genuine savings after 3 months in your account, or sometimes immediately if the source is clearly documented.
Using Settlement Proceeds as a Deposit
- Most lenders accept settlement proceeds as genuine savings after 3 months
- Some lenders accept them immediately with documentation of the settlement and transfer
- The proceeds don't need to be from a family home sale, any property settlement is accepted
- Combine with other savings for a larger deposit and better LVR
Stamp Duty on Property Settlement Transfers
In most Australian states, property transfers between separating parties under a binding financial agreement or consent order are exempt from stamp duty:
- NSW: Exempt under court order or BFA
- VIC: Exempt under court order or BFA
- QLD: Exempt under court order or BFA
- WA, SA, TAS: Exempt with varying conditions
Confirm the specific exemption conditions with your solicitor, the documentation required varies by state.
Timing Your Finance Application
- Before consent orders are signed: Assess your borrowing capacity on a single income. This informs what you agree to in the settlement.
- After consent orders: Apply for the refinance immediately, most orders give 60–90 days to complete the refinance.
- New purchase: Once settlement proceeds are in your account and the joint mortgage is resolved, you're ready to apply as an individual borrower.
Worked Example: Property Settlement and New Purchase
- Family home sold for: $1,350,000
- Joint mortgage: $550,000 | Net proceeds: $800,000
- Each party's share: $400,000
- New purchase target: $900,000
- Deposit (from proceeds): $180,000 (20%), held 4 months
- New loan: $720,000 | LVR: 80%, no LMI
- Income: $105,000 p.a. + $12,000 child support
- Monthly repayment (6.49%): ~$4,551
- Outcome: Straightforward approval, strong deposit, clean income
