6 Ways To Cut House Settlement Costs

1. Negotiate fees with your lender

Before settlement day, you’ve already covered major expenses — you’ve handed over a deposit and paid stamp duty. But there are plenty of fees to anticipate, including:

application and processing fees (if buying)
establishment (or settlement) fees
valuation fees
loan payout fees (if selling).

Most lenders, especially banks, often charge fees for setting up and applying for loans. Since you’ll be paying enormous amounts of interest over the loan term, you shouldn’t be afraid to negotiate these fees. You have the leverage to request a fee waiver or reduction.

Additionally, lenders may require a property valuation using their own valuer, which you, of course, have to foot the bill for. Valuation fees can cost hundreds of dollars, while loan application fees and establishment fees may be up to $1,000 each. These amounts may seem small compared to the property price, but every bit you can save in fees will make a big difference if you throw them at your loan’s principal at the outset of your mortgage.

If you’re working with a mortgage broker, ask them to find a loan with minimal fees. Be cautious with obscure mortgage products offered by smaller, niche lenders, such as low-doc loans, which tend to have higher costs due to their higher risk profile.

For sellers, there may be a loan payout fee, also known as an early payout fee, depending on the terms of your mortgage. You should be able to negotiate that fee, especially if you intend to take out another mortgage with the same lender for your next property.

» MORE: Can I negotiate my home loan’s interest rate?

2. Cut conveyancing costs

Solicitors can charge up to $2,0000 for conveyancing on a residential property. These costs can climb even higher for larger, more expensive homes.

If you’re lucky enough to have a family member or friend who is a solicitor, you can get them to do the conveyancing for mates rates, which may be half what they would typically charge.

If you don’t know a solicitor personally, ask friends, family or colleagues because you’re bound to know someone who does. While tapping your social circle, ask anyone who recently went through the buying or selling process if they can provide trusted referrals.

You can also shop online for competitive rates. Make sure to research their reputation by reading client reviews or asking for referrals from recent buyers.

» MORE: Costs to know when buying a house

3. Negotiate your real estate agent’s fee

Real estate agents usually charge a commission based on the sale price of your property, typically anywhere from 1.5% to 4%. The median commission is in the 2-2.5% price range, meaning that for a $500,000 sale, you can expect to pay around $10,000 to $12,500 in fees.

Once again, don’t hesitate to negotiate. Many agents are willing to lower their commission, especially in a competitive market. You can also shop online for a cheaper agent but don’t sacrifice too much for quality. A lower commission may not always mean better value, especially if it results in a lower sale price.

In many cases, it’s worth paying a standard or even higher commission to ensure you get the best sale price. For example, if an agent’s higher commission leads to a better marketing strategy and stronger negotiation, the higher sale price may more than cover the extra fees.

🤓 Nerdy Tip

Before negotiating, ask your real estate agent about their experience, track record, and marketing plan to understand the value they bring to the table to make sure these are house settlement costs worth cutting.

4. Lower your marketing and advertising costs

Effective marketing is vital for getting the best price for your property, but it doesn’t have to break the bank.

Your real estate agent should be on top of the best places to advertise so you get the most bang for your buck. However, their strategy will likely involve advertising in the glossy property sections of local newspapers, which are expensive.

Discuss more affordable alternatives, like online listings or targeted digital ads, which can reach a broader audience for less. Also, researching online property forums can help you see where to get the cheapest exposure.

Lowering these fees can make a big difference in your overall house settlement costs, especially since large colour print ads, even in community newspapers, can run into the thousands of dollars.

5. Consider a simultaneous settlement

If you’re selling a property and buying another, a simultaneous settlement — where you settle on the old and new properties on the same day — may be worth considering. By settling on both properties at the same time, you avoid paying rent for temporary housing and can minimise moving costs, as you’ll only need to move once.

However, this strategy is risky, potentially leading to financing delays and difficulties in coordinating both transactions. It’s important to talk to a property professional and ask your lender to ensure a simultaneous settlement is feasible for your situation and won’t cause unnecessary complications, which could lead to higher house settlement costs.

6. Adjust the length of the settlement

The settlement period is the time between the exchange of contracts and when you finalise the sale on settlement day. While this period is typically six weeks, you can negotiate a shorter or longer time frame depending on your needs.

If, for example, you’re renting and are eager to move into your new property as quickly as possible, a shorter settlement could help you save on rent and start paying down your mortgage faster.

On the other hand, a longer settlement may be ideal if you need more time to save or get your finances in better order. An extended period can provide breathing room so you have time to secure additional funds — potentially by staying with family or friends — before you take on mortgage repayments.

Strategies like these have been highly successful in helping people save money from their total mortgage bills. Of course, you need to do some calculations to weigh up the potential savings for each option. Talk to an expert to determine the best settlement length for your situation.