Benefits of a longer settlement period

Viewing 8 posts - 1 through 8 (of 8 total)

harvest316
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@harvest316
Join Date: 2008
Post Count: 18
November 24, 2008 - 9:19 am
I hear a lot of comments inferring that a longer settlement period is a good thing. Can anyone explain why exactly?
Sorry, I havent bought a house yet…
crashy
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@crashy
Join Date: 2003
Post Count: 736
November 24, 2008 - 10:51 am
well you are exposed to any capital growth during this period, you can sell during this period (called a flip) for a profit without paying stamp duty, longer to get finance or sell another property, longer to get building approval….maybe more
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
November 24, 2008 - 12:36 pm
crashy wrote:
well you are exposed to any capital growth during this period, you can sell during this period (called a flip) for a profit without paying stamp duty, longer to get finance or sell another property, longer to get building approval….maybe more
Hey, Crashy, what do you mean no stamp duty?
If you have exchanged on a property you will be required to pay stamp duty if you onsell before you settle. I think every state in Australia you would be liable.
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C2
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@c2
Join Date: 2002
Post Count: 518
November 24, 2008 - 1:08 pm
It has been suggested that a longer settlement in an upmarket can help with LVR avoiding MI depending on when your loan starts etc.
harvest316
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@harvest316
Join Date: 2008
Post Count: 18
November 24, 2008 - 7:11 pm
Thank you, people. I think I’m starting to get it.
crashy
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@crashy
Join Date: 2003
Post Count: 736
November 24, 2008 - 9:22 pm
yes Terry, you are right:

https://www.propertyinvesting.com/forums/property-investing/creative-investing/4321289?highlight=flip
Ana
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@ana
Join Date: 2004
Post Count: 79
November 27, 2008 - 1:56 am
From a renovation point of view, we have organised to get early access in the past for the purposes of quote/measure or to actually start doing the demolition/ preperation/renovation during the settlement period.
So having a longer settlement period has worked to our advantage as we have been able to do work prior to officially owning the property. In a couple of cases we managed to complete the full renovation during this period and have it back on the market straight away without incurring additional holding costs.
Wishing you every success,
Ana
duckster
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@duckster
Join Date: 2004
Post Count: 1,674
November 27, 2008 - 9:03 am
You may be able to use a longer settlement as a bargaining point with the seller. As it gives the seller more time to organise somewhere else to live. They might bring down the price for the opportunity of saving interest from bridging finance.
You do not usually pay interest on the loan until settlement occurs and you get capital growth in the mean time.
It gives you some breathing space to organize finance The bank will love the extra time.