When you are purchasing a house and land investment property, you purchase the land first and pay a deposit toward the construction. Then the builder is paid progressively as the construction develops.
Settlement is a meeting between your solicitor, a representative from your lender, and the vendor’s solicitor.
The vendor’s solicitor provides the title of the land to the lenders representative, who in return provides cheques to pay the money owed for the purchase. The title is then transferred into your name, and the lender has the mortgage on the property with details of your loan.
You now own the land for your purchase.
Also at this time, a cheque is drawn from your loan for the first 5% of the building and paid to the builder This covers money that the builder has already spent to clear your lot, make council applications and connect the power, water and sewerage.