When the bank won't make your settlement date

You’ve signed the contract, paid the deposit and booked the removalists for the new premises. Then the bank tells you the funds won’t be ready by settlement. It’s one of the most stressful moments in business, and one of the most fixable.

Why bank settlements run late

• The valuation was ordered late or came in below the price
• Credit wants more documents: updated financials, leases, BAS
• The approval is conditional on something not yet satisfied
• A business purchase approval is caught in a review queue
• Simple volume: the bank is busy and your file isn’t urgent to them

None of these mean the purchase is a bad idea. They just mean the timing has slipped.

How a private loan saves the settlement

A private lender settles the purchase on time, then gets repaid when the bank’s funds arrive, often within weeks. The structure depends on your position:

Situation	Typical security
You have the deposit and the bank approval is close	First mortgage over the property being bought
You need more than the purchase alone supports	First mortgage over the purchase plus a second mortgage over your home or another property
Buying a business, not property	Mortgage or caveat over property you already own

What the lender will need, fast

1. The signed contract of sale, including the settlement date and special conditions
2. Evidence of the deposit paid
3. Details of the bank approval so far, and what’s holding it up
4. ID for all purchasers, directors and guarantors
5. Access for a valuer, or details of the bank’s valuation
6. The full settlement figure, including stamp duty, GST and adjustments

Count every dollar at settlement

Settlement needs more than the price. Plan for transfer duty in your state, GST if the sale isn’t a going concern, rates and land tax adjustments, legal fees and the private loan’s own costs. If you under-borrow by a few thousand dollars, settlement still fails.

Talk to the vendor too

While the private loan is arranged, ask your solicitor whether the vendor will agree to a short extension. Vendors often prefer a few extra days to a terminated contract. An extension plus an approved private loan gives everyone certainty.

The exit is usually the bank

The most common exit is the bank that was running late. Once its approval and funds are ready, it refinances the private loan. Set the private term with a buffer beyond the bank’s expected date, and check there’s no long minimum interest period. The exit plan checker helps you test the timing.

A worked example: the bank valuation came in short

A Brisbane accountant was buying the strata office suite his practice had rented for years. The contract was unconditional, with settlement on a Friday. On the Monday before, his bank’s valuer put the property $150,000 below the purchase price and the bank reduced its loan accordingly. The vendor wouldn’t extend, and the contract allowed penalty interest and possible termination if settlement failed.

He owned his home in Ashgrove with good equity. A private lender advanced $190,000 on a second mortgage over the home to cover the shortfall plus stamp duty adjustments and the lender’s own costs. The bank’s reduced loan still settled on the office as planned, and the private funds were paid into the settlement on the day.

The exit was a refinance twelve months later, once the office could be revalued and the practice’s new accounts showed the saving from owning instead of renting. In the meantime, interest was prepaid from the advance.

Settlement day checklist

When a private loan is filling a settlement gap, coordination matters as much as the money. Make sure:

• your conveyancer or solicitor knows a private lender is involved and has their contact
• the lender’s solicitor has the contract, the bank’s letter of offer and the settlement statement
• you know the exact figure required, including adjustments for rates and other outgoings
• the bank and the private lender agree on the order of security and priority
• any required consents, such as from the first mortgagee on a second mortgage, are requested early
• you’ve confirmed the PEXA workspace details or settlement arrangements

Deadlines slip when one of these is left until the last day. Send the paperwork with your enquiry and the lender can start before the valuation is back.

Save the settlement

Tell us the property, the settlement date, the amount needed and where the bank is up to. A person on our desk will call you back quickly with what’s achievable. There’s no credit check when you first enquire, and your details aren’t sprayed across a list of lenders.

Please give us the exact settlement date and figures so we can plan backwards from it. See if you qualify, or read about private bridging loans and then send it through.