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Video · 2:36

Settlement in rescission? Bridging finance to save the deposit and the property

2:36 · Posted 21 January 2019 on the HomeSec YouTube channel

Paul Stone explains how bridging finance can stop a property settlement going into rescission and protect the deposit when the buyer's finance falls over.

Four things worth having in writing

  1. There are two causes. The buyer's own finance not being ready, and a chain: the sale of another property does not settle on time, so the money for this purchase never arrives. Paul calls it a domino effect.
  2. The deposit is not the whole loss. His example is a developer who cannot settle on a parcel of land and watches it resold at a significantly higher price. The deposit goes, and so does the price agreed before the market moved.
  3. Four things decide whether the loan can be written: enough equity in real estate, a purpose and structure that can be lent to, the loan secured against that real estate, and an exit. On a settlement file the exit is usually the finance that was not ready in time, or the other asset that could not settle in time.
  4. Arrears and a poor credit file are not what decides it. In his words, “a bad credit history and mortgage arrears don't faze us”, because the property, the equity and the exit are what is assessed. Mention both on the first call anyway; every application is assessed on its merits.
The full guide

The video is the short version. The written guide has the detail: business bridging loans for property settlements.

To talk it through about your own property, ring a Lending Manager on 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.

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