Settlement is the stage where your refinance becomes legally binding and your old loan is paid out. Most ambulance officers underestimate how much coordination happens in the background between discharge dates, new loan drawdowns, and redraw balances that need to be cleared before the payout figure is calculated.
The settlement process typically runs between four and eight weeks from application approval to final drawdown, but the real cost comes from mistakes made before you even reach that point. Miss a step during application or miscalculate what needs to be paid out, and you'll either face delays that cost you the rate you locked in or end up paying interest on two loans at once.
Mistake 1: Not Checking Whether Your Current Loan Has Redraw Before Requesting the Payout
Your lender calculates the payout figure based on the loan balance at a specific future date, but if you have funds sitting in redraw, those need to be withdrawn before that calculation is finalised. Most lenders will not factor redraw into the payout amount automatically, which means you'll lose access to those funds when the loan is discharged unless you pull them out beforehand.
Consider an ambulance officer refinancing a loan with $340,000 owing and $22,000 sitting in redraw. If you request the payout figure without clearing the redraw first, the new lender pays out $340,000, the old loan is closed, and the $22,000 disappears into the discharged account with no mechanism to retrieve it. You would need to contact the old lender, request a manual release, and hope they process it before the account is archived. That process can take weeks and often requires multiple calls during shifts when you should be off duty.
Withdraw redraw funds at least five business days before settlement is scheduled. If your new loan includes an offset account rather than redraw, move the withdrawn funds there immediately after settlement so they continue reducing the interest you pay.
Mistake 2: Assuming Your Fixed Rate Period Ending Means No Break Costs
Break costs apply when you exit a fixed rate loan before the term expires, but many ambulance officers assume that because their fixed period is ending soon, the cost will be negligible. Break costs are calculated based on the difference between your fixed rate and the wholesale rate your lender can now lend that money at for the remaining term. If rates have dropped since you fixed, you will pay a break cost even if you're one month from expiry.
In our experience, the biggest shock comes when someone refinances two months before their fixed term ends, expecting a break cost under $500, and receives a bill for $4,200. The calculation compounds when the loan balance is high and the rate differential is wide. Your old lender is required to provide the break cost calculation in writing, but most officers don't request it until after they've committed to the refinance and locked in a rate with the new lender.
If you're coming off a fixed rate within the next six months, request a break cost estimate before you apply to refinance. If the cost exceeds $2,000, compare it against the interest savings from the lower rate over the first 12 months. Sometimes waiting another eight weeks costs you less than paying the break fee today.
Mistake 3: Not Updating Your Lender When Your Settlement Date Changes
Payout figures are valid for a specific settlement date, usually between 10 and 30 days from the date of issue. If your settlement is delayed because of valuation holdups, document requests, or public holiday timing, the payout figure becomes inaccurate because interest continues accruing on the old loan daily. Your new lender will draw down the original payout amount, but if that figure is now short by three days of interest, your old loan won't discharge and you'll be paying interest on both loans until the shortfall is cleared.
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As an example, a loan balance of $480,000 at a variable rate of 6.2% accrues roughly $82 in interest per day. If your settlement is delayed by five business days and no one requests an updated payout, you'll be $410 short. The old lender will hold the discharge until that amount is paid, the new lender will start charging interest on the full drawdown, and you'll spend the next week on the phone between shifts trying to get both lenders to reconcile the difference.
When your settlement date moves by more than two business days, contact your broker or new lender immediately and request an updated payout figure. Most lenders can reissue a payout within 24 hours if requested early enough, but if you wait until the day before settlement, you'll miss the window.
Mistake 4: Forgetting to Account for Annual Fees and Government Charges in Your Payout Figure
The payout figure your old lender provides includes the loan balance, accrued interest to the settlement date, break costs if applicable, and any discharge or administration fees the lender charges. What it does not include is government fees for discharging the mortgage from the title, which vary by state and are paid separately to the land titles office.
Most ambulance officers budget for the payout figure but forget that discharge fees in New South Wales, for instance, sit around $155, while in Victoria they can exceed $200 depending on the number of titles involved. If you're refinancing an investment property with multiple titles or a subdivision, the discharge cost compounds per title. Your solicitor or conveyancer will usually invoice these separately after settlement, but if you're managing settlement yourself or using a lender's internal process, you need to confirm who is paying the government component and when.
If your old loan also has an annual package fee that was paid in advance and your loan is discharged mid-cycle, some lenders refund the pro-rated portion while others do not. Check your loan terms or call the old lender directly to confirm whether a refund applies and how long it takes to process. That refund can sit in limbo for weeks if the account is discharged before the refund is calculated.
Mistake 5: Not Confirming That Your Offset Balance Transfers on the Same Day as Settlement
If your current loan has an offset account and your new loan offers the same feature, most ambulance officers assume the balance will transfer automatically or that they can move it across internet banking on settlement day. Offset accounts are separate transaction accounts, and they do not form part of the payout process. If you don't manually transfer the offset balance before or immediately after the old loan is discharged, the account may be closed with the funds still in it, or worse, it remains open and accrues monthly account fees with no loan attached.
We regularly see this with officers refinancing while on shift, where they assume the broker or lender will handle the transfer and don't check their accounts until a week later. By that point, the old offset has been deactivated, the funds are stuck in a closed account structure, and it takes multiple calls to the old lender's retention team to release them.
On the day before settlement, transfer your full offset balance to an external account you control, such as your everyday transaction account. Once the new loan has settled and your new offset account is active, move the funds into the new offset immediately. The goal is to minimise the number of days your savings sit in a non-offset account accruing no benefit.
Refinancing settlement is a process that punishes assumptions. Every discharge involves multiple parties, tight timeframes, and fees that aren't always visible until the final invoice. The officers who avoid delays and keep their costs down are the ones who confirm every figure, every date, and every account balance before signing anything.
If you're refinancing to access a lower interest rate or release equity, call one of our team or book an appointment at a time that works for you. We'll walk through your current loan structure, confirm what needs to be cleared before payout, and make sure your settlement runs on time without surprise costs.
Frequently Asked Questions
How long does refinancing settlement take from approval to drawdown?
Settlement typically takes between four and eight weeks from application approval to final drawdown. The timeframe depends on valuation turnaround, document requests, and how quickly your old lender processes the discharge.
What happens to my redraw balance when I refinance?
Redraw funds are not automatically included in the payout figure. You need to withdraw them before settlement, or they will be locked in the discharged account and may take weeks to retrieve manually.
Do I still pay break costs if my fixed rate is ending soon?
Yes, break costs apply any time you exit a fixed loan before the term expires, even if you're only weeks away from the end date. The cost depends on the rate differential and your remaining loan balance.
What happens if my settlement date changes after the payout figure is issued?
The payout figure becomes inaccurate because interest continues accruing daily on your old loan. You need to request an updated payout figure from your old lender to avoid a shortfall that delays discharge.
Does my offset balance transfer automatically when I refinance?
No, offset accounts are separate transaction accounts and do not transfer automatically. You need to manually move the balance to an external account before settlement, then into your new offset once it's active.
