Hi there,
Just wondering if anyone can advise on the following:
My partner and I are due to settle on the sale of our property on 1st May, we are also sue to settle on the purchase of our next property on the same date. The contract on our sale is unconditional. However…… we are having some problems with the finance approval for our purchase.
I am a full time student and my partner is due to start his new job on 23rd April. We submitted his employment letter to our mortgage broker as requested. Now the mortage provider is requesting payslips before approving the mortgage – which of course we won't have by the time our settlement date is due. We have it in writing that the mortgage will be approved when they receive a payslip.
During the process of applying for the new mortgage our broker has been VERY optimistic that we would have no problems obtaining finance. In fact the vendor's real estate agent and both conveyancers seem to have got the impression a fortnight ago that we already had finance approved when we did not! Of course the broker denies telling them anything of the sort! The upshot of all this is that we are potentially going to have to request a delay of settlement from the vendors who by all accounts are pretty annoyed that they have apparently been misled by our broker as to our financial situation.
One solution I thought may be to request a delay in settlement and early possession and pay "rent" to the vendors (the property has been vacant for 5 months), however I can see that the vendors may feel that we are too much of a risk given the trouble we are having with the finance. I understand that this sort of arrangement is different from a normal tenancy agreement with regards to expectations, rights and insurance etc. The mortgage we are after is for just 30% of the purchase price with pretty small repayments which we can easily afford, but getting approval is turning into a stumbling block.
I guess my questions would be:
Has anyone had experience of taking early possession and paying "rent" prior to settlement? or allowing a buyer to do so?
A friend suggested getting a new mortgage broker, although I'm reluctant at this late stage, opinions?Sorry for the long post, thanks for any advice
MDepending upon your location – there are a number of good finance brokers (not me) on this forum who will be able to help you out with this. 30% loan seems no brainer to me.
Hint: Why don't you buy the new property as investment and therefore show new rental income and 'move to your parents' for a 'short-term' until such time you can afford to move in back.
You are in a very dangerous situation. If you do not settle on time you could be served with a notice to settle and then you will have just 14 days (usually) to settle or you could lose your 10% deposit and be sued.
The vendor may be ready to settle on their new property on the day you settle on theirs. You not settling could have a domino effect.
What state is the property in?
I don't mean to scare you but read this case:
South Sky Investments Pty Ltd v Luppi [2012] QSC 27
http://jade.barnet.com.au/Jade.html#sy=261412The purchaser did not complete the purchase and was ordered to pay more than $400k in damages to the vendor.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Wow Mayle i wouldnt fancy being in your shoes as Terry mentioned loss of deposit is just 1 issue you might have to face.
Without knowing the full facts it is difficult to comment but i can think of a few lenders who would insist on 2 consecutive payslips irrespective of the lvr. In saying that i can think of a dozen more you would have no problem.
I cant see the lender issuing the approval and then the loan documents prior to the 23rd April and there with Anzac Day being a Public holiday i cannot see any hope of you being able to settle on the 1st May.
I had a forum client earlier in the year who forgot (despite a number of requests from me and her Solictor) to transfer the balance of her settlement funds to the Solictors Trust Account prior to Settlement. She then did it on the 25th January and with the 26th being Australia day and her being abroad at the time the funds did not arrive in time for the settlement on the 27th. Vendor terminated that afternoon and kept the $33,000 deposit.
Moral of this post is ACT NOW so not wait until your Broker can sort it out.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
The property is in the NT. I'm not sure what the vendor's situation is, however I know that they had been considering keeping the house as an investment property even though the house was on the market. They have already moved overseas.
I was under the impression that settlement dates can be changed provided that all parties agree to the change of date. Obviously if the vendors are settling that day then yes, we could be in strife. At this stage our contract is still conditional. Interesting article Terryw. I've been harassing (!) the mortgage broker and conveyancer for solutions and maybe a case like that will give them an understanding as to why we are getting quite anxious about the situation
Cheers
MYou can change settlement dates if they agree. If the contract is conditional then you may not be in so much strife. Best to work out a new settlement date before it goes unconditonal as you will have more leverage over them.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:You can change settlement dates if they agree. If the contract is conditional then you may not be in so much strife. Best to work out a new settlement date before it goes unconditonal as you will have more leverage over them.I agree with Terry – Act now – another option is to offer a small sweetener for the delayed settlement – like paying the rates or a couple of weeks "rent"
Cheers
Thanks for the advice. We have asked for delayed settlement and have offered them rent (at current rental market rates) for the time between the current settlement date and the new one. Will be keeping fingers crossed.
MHmmm problem is you are going into to a conforming lender that requires payslips. Your broker really should have organised alternative funding through a non-conforming lender as they should have known your situation with no payslips etc.
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