Funding a delayed property settlement

Business property purchases run on fixed settlement dates. When the funds you were relying on are late, perhaps because a refinance has stalled or another property has not sold, the settlement date does not wait. Here is how to keep the deal on track.

Step 1: tell your conveyancer immediately

Your conveyancer or lawyer can explain what your contract says about late settlement, how much flexibility the vendor might give and what it would cost. The earlier they know, the more options there are.

Step 2: work out the exact shortfall

Include everything due at settlement:

• Balance of the purchase price.
• Stamp duty, if not already paid.
• Settlement adjustments for rates and other charges.
• Legal and registration fees.

The shortfall is what bridging funding needs to cover.

Step 3: identify security

Short-term property-secured funding needs a property to secure it. Usually that is another property you already own, such as your home, an investment property or business premises. Sometimes the property being bought can be used after settlement.

Need an answer this week? Send the 60-second enquiry now. Your details stay with one team and a real person picks it up.

Step 4: choose the structure

Option	Fits when
Caveat loan	Speed matters most and the gap is short
Bridging loan	The exit is a sale or refinance in the near future
Second mortgage	The gap could run longer

All run from $20k to $5m with no valuation needed. Interest can be paid up front or capitalised, so there are no repayments until the delayed funds arrive.

Step 5: confirm the exit

Be clear about what will repay the bridge and when. If the refinance hit a genuine problem rather than a delay, factor that in. Our guide to exit strategies explains how to build a plan B.

Timing tips

• Start the bridging enquiry the same day you learn of the delay.
• Give the lender your conveyancer’s details so the two can coordinate.
• Have ID, property details and the contract of sale ready.
• Warn anyone who will need to sign.

Costs to weigh

Compare the cost of the bridge with the cost of missing settlement: penalty interest, possible loss of the deposit and the risk of losing the property altogether. In most cases, a short bridge is far cheaper than the alternative.

An illustrative example

A physiotherapy group is buying its clinic premises for $1.6m. Its bank refinance, expected a week before settlement, is delayed by three weeks while the bank completes its checks. The shortfall, including duty and adjustments, is $720,000. A caveat loan over a director’s investment property, with interest capitalised, settles the purchase on time. The bank refinance completes a month later and repays the caveat loan.

Related reading

• Funding a property settlement deadline: Facing a business property settlement deadline with funds not ready? How bridging finance and caveat loans can settle on time, and how to plan the exit.
• Bridging finance for business: Business bridging finance covers the gap until a sale, settlement or refinance completes. How it works, how it is secured and how to plan a safe exit.
• Caveat loans: Caveat loans give businesses fast, short-term funding secured by a caveat on property. How they work, when they fit and how to plan the exit.
• Exit strategies for short-term property loans: How to plan the exit from a caveat loan, second mortgage or bridging loan: sale, refinance, receivable or trading cash, plus a plan B if timing slips.
• Prepaid vs capitalised interest: How prepaid and capitalised interest work on property-secured business loans, what each does to the amount you receive and repay, and which suits when.

A quick glossary

• Caveat: a formal warning recorded against a land title, telling anyone who searches it that a lender claims an interest in that property.
• Second mortgage: a mortgage registered after the home loan already on the title, so it is paid out second if the property sells.
• Capitalised interest: interest that rolls into the balance owing rather than leaving your account each month.
• Prepaid interest: interest for an agreed period settled at the start of a loan, usually out of the advance, leaving nothing to pay for that period.

Five things to confirm with any lender

• What will this cost in total, not just per week?
• Are there establishment, line or exit fees?
• Can the term be extended if a sale or refinance is delayed?
• Which assets or properties are being used as security?
• How quickly can the facility be closed if I no longer need it?

Advice worth getting

A good accountant can save you from borrowing too much, too little or in the wrong structure. Share the quote, the purpose and your forecast with them. If they spot something, such as an upcoming tax bill or a better way to structure an asset purchase, it is much easier to adjust before the documents are signed.

Quick recap

• Missing settlement can mean penalties or a lost deposit
• Tell your conveyancer the day you know
• Caveat or bridging loans can fund the gap quickly
• Repay from the delayed funds when they arrive

From enquiry to an answer

One enquiry, one team, one clear answer. That is the whole approach. We read what you send, call you, ask for the documents that matter and lay out the options in plain English with the total cost attached. Your details are not shopped around, and your credit file is only checked if you choose to accept an offer. If the answer is no, you will hear it quickly and with a reason, so you can plan your next move.

Funding or another fix?

Not every cash problem is a funding problem. Sometimes the better fix is a conversation with a supplier, a payment plan with the ATO, chasing an overdue invoice or adjusting prices. Funding earns its place when it solves a timing gap or unlocks an opportunity worth more than its cost. We will tell you honestly which situation you are in.

Paperwork worth gathering

You do not need a folder of financial statements to start an enquiry. For most unsecured and property-secured funding, these few items cover the essentials:

• Photo ID for each director or owner.
• Access to your business bank account for a secure statement link.
• Your latest BAS, if it is handy.
• Details of existing finance, including any daily or weekly repayments.
• For property-secured funding, the property address and current loan balance.

A quick word on the enquiry form

Late surprises are what slow funding down. A second property owner nobody mentioned, turnover that is lower in the statements than on the form, an amount that doubles after the first call: each one sends the assessment back to the start. If you tell us the full story at the beginning, even the awkward parts, the file only has to be worked through once.

Let’s see what fits

The quickest way to know what is realistic is to send the 60-second enquiry. It runs no credit check, it is read by a person rather than an algorithm, and your details stay with one team instead of being sent to a list of lenders. Please answer the questions as accurately as you can, especially the amount, your monthly turnover and your credit history. Accurate answers mean the first option we put in front of you is the right one.