I’m about to lose $20,000 – all advice appreciated

Has anyone else ever had to rescind on a contract? What was the outcome for you? Does anyone have any other ideas on what I could possibly do to avoid losing my $20,000?

I’m a 27yr old female property investor and have been investing in property for over five years. I've bought and sold 4 properties and currently hold 3; a 3 bedroom home in Dunlop ACT, a 2 bedroom unit in Moruya NSW and a 3 bedroom new home in Bonner ACT.  

Last year I exchanged contracts on a block of land in Bonner ACT in order to build another home on, the plan was then to either rent the property or sell for a profit depending on the market situation at the time. The land was being sold through the Land Development Agency – a government organisation in the ACT. After getting pre-approval for the loan to buy the land I used a long term deposit bond to exchange and sat back waiting for the LDA to release the title of the block. 

After 12 months the crown title was released and I was given 42 days to settle on the block. As soon as I was notified of this I went straight to my broker and submitted a full loan application after being re-assured by him that finance would not be an issue. Having applied for finance many times before I was aware of the lengthy delays in processing applications and to speed up the processing time I was fully prepared with all documentation. I was hoping to re-finance my Dunlop and Moruya property to utilise enough equity to finance the block. Unfortunately after valuations my LVR was sitting at 83%. My mortgage broker advised me that even though it was LMI territory I should still have no problems getting finance. 

Lesson # 1: Never take a mortgage broker’s opinion as gospel 

After 8 weeks of submitting further documentation to satisfy the MI’s of serviceability and an extension from the LDA of 2 weeks to settle I was knocked back on the basis that I was two days late making a mortgage repayment on my Dunlop property. I went on to explain it was due to a change over in tenants and the repayment was still made, but this was not satisfactory according to the MI’s. 

I immediately sought cash from everywhere to avoid refinancing and simply put down a cash 20% deposit. I managed to do so by borrowing $5k from my mother, getting my annual leave paid out at work, re-drawing on the other mortgages and essentially for-going paying all other expenses. The purchase price of the land was $188,000 and in 2 weeks I had pulled together the deposit…I patted myself on the back for that. I had successfully received a further 2 week extension on the settlement date from the LDA – however in penalties and legal fees thus far I had incurred an additional $2,100.  

I sought finance direct from the bank this time, the personal lender was puzzled at why I had been knocked back for finance as the worst case scenario she ran through her calculators all returned a pre-approval. In 5 days I received conditional approval and was re-assured unconditional approval couldn’t be far off. However, the day before settlement date I got nervous and contacted the lender, only to find the application had been rejected for the same reason as before ‘account conduct.’ 

I am now faced with the loss of my 10% deposit as well as legal fees and interest – which I have of course, but after fighting for so long to scrape it all together I am just devastated at the thought of giving it away. I have asked the LDA for the third time for an extension to on-sell the property. I have a buyer lined up and am only asking the same price I would be required to pay – hence not making any sort of personal profit. I have not received an answer yet, but given my previous experience with the LDA for my first Bonner purchase, I highly doubt any mercy on their behalf.