Your Complete Guide to Cooling Off
Buying a property is one of the biggest financial commitments you will ever make. Once you’ve signed the contract, there is a short but crucial window of time where you can pause, review, and ensure you’re making the right decision. In NSW, this is known as the cooling-off period.
In this part of our guide, we’ll explain exactly how the cooling-off period works, how to use it strategically, and the mistakes to avoid. To make things easier, we’ve also included a free downloadable checklist and answers to the most common FAQs at the end of this article, so you can navigate this stage with confidence.
Handled well, the cooling-off period is not just an “exit clause”, it is your opportunity to finalise inspections, confirm finance, and negotiate changes to the contract. Used strategically, it can save you thousands of dollars and prevent you from committing to a purchase that isn’t right for you.
Step 1: What the Cooling-Off Period Means in NSW
Most residential property buyers in NSW have five business days from 5pm on the day of exchange (or the next business day if exchange happens after 5pm) to decide whether to proceed.
It applies to:
- Houses and apartments (with some exceptions)
- Residential investment properties
- Certain off-the-plan purchases
It does not apply to:
- Most auction sales
- Commercial property transactions
- Purchases where you have waived your cooling-off rights in writing
If you withdraw during this period, you will forfeit 0.25% of the purchase price, with the rest of your deposit refunded. For example:
- $500,000 property → $1,250 penalty
- $800,000 property → $2,000 penalty
- $1,000,000 property → $2,500 penalty
For many buyers, this penalty is a small price to pay if inspections or due diligence uncover serious issues.
Step 2: How to Use the Cooling-Off Period Strategically
The cooling-off period is your time to complete all outstanding checks, make sure you’re financially ready, and confirm that the property is truly worth buying.
Here are some things to do while cooling off:
1. Arrange all inspections immediately
If you haven’t already, book your building and pest inspections as soon as contracts are exchanged. If you’re buying an apartment or strata townhouse, order a strata report. Delays here can mean you run out of time to act on what you find.
Example: We’ve seen buyers lose their chance to negotiate repairs because their inspection was booked for day five. By the time they received the report, the cooling-off period had expired.
2. Secure unconditional finance
Make sure your lender has given final approval for your loan. This is also the time to review your mortgage terms and interest rate. If approval falls through, you may still have time to approach other lenders.
3. Conduct a thorough contract review
With your property lawyer or conveyancer, go through the contract clause by clause. Check for:
- Special conditions that may restrict your use of the property
- Easements or encumbrances on the title
- Council compliance and approvals
- Attachments such as zoning certificates and building plans
4. Negotiate if issues arise
Inspection results and legal reviews can provide strong grounds for negotiation. Depending on what’s uncovered, you could:
- Request that repairs be completed before settlement
- Negotiate a price reduction to cover the cost of repairs
- Extend the settlement period to allow time for finance or works
- Add specific conditions to protect your position
Step 3: When to Waive or Extend the Cooling-Off Period
Waiving your rights
In competitive markets, sellers often prefer offers with no cooling-off period. You should only agree to this if:
- All inspections are completed
- Finance is unconditionally approved
- Your lawyer has reviewed the contract and is satisfied there are no risks
Once waived, you cannot withdraw without losing your deposit entirely. Only waive if you are certain the property is right for you.
Extending your rights
Extensions are less common but can be negotiated if both parties agree in writing. This can be critical if:
- Inspections are delayed due to access issues or bad weather
- Finance approval is taking longer than expected
- Title or contract issues require further investigation
Your lawyer can handle these negotiations and ensure the extension is documented.
Step 4: Mistakes to Avoid
Some of the most common (and costly) mistakes buyers make include:
- Using the cooling-off period as “cheap insurance” instead of completing checks before exchange
- Leaving inspections too late and running out of time to act
- Misunderstanding the deadline (weekends and public holidays count in calculating end dates)
- Attempting to withdraw verbally instead of in writing
- Waiving rights without doing full due diligence
- Not engaging a lawyer early enough to provide advice and support
Step 5: How & Legal Helps You Maximise Your Cooling-Off Period
At & Legal, we ensure you use every day of the cooling-off period to your advantage. Our service includes:
- Immediate contract review to identify risks and opportunities
- Coordination of inspections and explanation of findings in plain language
- Liaising with lenders and brokers to secure finance promptly
- Negotiating repairs, price reductions, or contract amendments
- Advising objectively on whether to proceed, renegotiate, or withdraw
We also manage all formal communications so nothing is left to chance.
Practical Tips for Making the Most of Your Cooling-Off Period
- Act immediately after contracts are exchanged
- Book all inspections within the first 24 hours
- Contact your lender the same day to confirm finance
- Keep all reports, quotes, and communications in one place
- Focus on facts rather than emotional attachment to the property
- Ensure all important communications go through your lawyer
Buying a Property? Let’s Make Your Cooling-Off Period Work for You
The cooling-off period is one of the most valuable legal protections for property buyers in NSW. When handled strategically, it can protect your investment, improve your contract terms, and give you the confidence to move forward knowing you’ve made the right choice.
Whether you’re a first-time buyer, an investor, or upgrading your home, our Essential, Premium, and Elite conveyancing packages are designed to give you the exact level of support you need.
Download Your 5-Day Cooling-Off Period Action Plan
Want to make sure you don’t miss a single step? We’ve put together a simple, day-by-day checklist to help you maximise your cooling-off period and protect your purchase. Download it now and keep it handy as you work through your inspections, finance, and contract reviews.
FAQS
How long is the cooling-off period in NSW?
For most residential purchases, it’s five business days from 5pm on the day of exchange. Auction purchases have no cooling-off period.
What happens if I withdraw during the cooling-off period?
You’ll forfeit 0.25% of the purchase price, but the rest of your deposit will be refunded.
Can I extend the cooling-off period?
Yes, but only if both parties agree in writing. Your lawyer can request an extension if needed. Don’t leave it to the last minute, make sure you have the agreement in writing before the period expires.
When should I arrange inspections?
If you haven’t done it before exchange then immediately after exchange. Five days passes quickly, so it’s vital to book inspections straight away.
Should I waive my cooling-off rights to make my offer stronger?
Only if all inspections are complete, your finance is fully approved, and your lawyer has confirmed there are no contract concerns.
Does the cooling-off period apply to investment properties?
Yes, provided they are residential properties and not purchased at auction.
Can the cooling-off period be used to negotiate the price?
Yes. If inspections reveal issues, your lawyer can negotiate a price reduction or repairs before settlement.