All Topics / Help Needed! / 30 Day Settlement Questions

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  • Profile photo of neilharrison_253neilharrison_253
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    @neilharrison_253
    Join Date: 2013
    Post Count: 33

    Hi All

    Being a newbie I am looking for advice on a house I am about to put an offer in on. I am considering putting in a 30 day settlement as the property is currently vacant and think this may be a nice sweetener to the deal. I am not pre approved for finance however having spoken with my broker I should have no issues. Deposit sitting in bank waiting and buying at half my serviceability level. Besides standard clauses as shown below what are the implications with putting 30 day settlement down. When does this 30 days start? When offer is accepted / contracts are exchanged? Is this enough time to get finance approved? Should I request finance at 21 days instead of 14.
    1. Subject to building and pest inspections deemed satisfactory by the buyer
    2. Subject to finance deemed satisfactory by the buyer

    Thanks in Advance

    Neil

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Neil

    What does your broker say about the timeframe?

    30 days from the when the offer is accepted is doable. It’s a bit tight but it’s possible.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of neilharrison_253neilharrison_253
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    @neilharrison_253
    Join Date: 2013
    Post Count: 33

    Hi Jamie

    Have yet to speak to him about it. Only just seen the house so thought id do some digging around this evening before I spoke with him tomorrow. Having said that I also spoke with you some time back regarding a mortgage and you somehow slipped my mind so could also deal with you :)

    So i am correct in saying then that the 30 days kicks in when contracts are exchanged?

    Regards

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Neil

    I agree tight but doable.

    Had a couple of deals in from forum members this week which are 30 day settlements and they are both going to be right especially coming upto the end of the Financial Year.

    Just make sure your Solicitor starts the relevant searches nice and early as that is the last thing you need to slow down the process.

    Other than as long as you choose a lender that is on the ball you should be ok.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Yep, I remember helping you late last year.

    It’s totally up to you when the 30 days kicks off. If you think it will be more enticing to start it from when the offer is accepted, go for it. Just need to make sure the valuation/application/approval/docs are all pushed through quickly.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of neilharrison_253neilharrison_253
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    @neilharrison_253
    Join Date: 2013
    Post Count: 33

    Hi Richard

    Thanks for the comments, can I presume that the 30 day settlement puts more pressure on the Solicitor than the bank / mortgage provider? If so have you got any recommendations regarding solicitors. I am based on the Sunshine Coast but don’t think that’s much of an Issue if they are not or is it? Is a finance clause at 21 days sufficient?

    Regards

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    The most pressure is on the broker/finance provider IMO. If they aren’t efficient it won’t happen on time.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of neilharrison_253neilharrison_253
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    @neilharrison_253
    Join Date: 2013
    Post Count: 33

    Also, is it 30 business days or 30 calendar days? If so would option for 45 days be better?

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Normally calendar days. It’s whatever you make it.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of JpcashflowJpcashflow
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    @jpcashflow
    Join Date: 2007
    Post Count: 575

    Jamie is your man, he recently done a deal for me in a short period of time.

    I was so impressed that he Is know my mentor in the mortgage broker industry.

    Jpcashflow | JP Financial Group
    http://www.jpfinancialgroup.com.au
    Email Me | Phone Me

    Your first port of call in finance :)

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    I am a solicitor and broker and doing both conveyancing and loan for a client. ready to settle within 3 weeks..Just waiting now for another few weeks to pass by… Not always like this though. I recall another loan that only get the approval 2 weeks before settlement.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of jmsracheljmsrachel
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    @jmsrachel
    Join Date: 2012
    Post Count: 711

    30 days is really tight. You’d better hope your broker is as quick and good as Jamie!

    Profile photo of OllieOllie
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    @ollie77
    Join Date: 2014
    Post Count: 30

    I’m currently in this situation on a interest in advance loan trying to get it all sorted before July 1 due to my 13-14 tax advantages, it is doable as long as you get an unconditional loan agreement and the vendor is keen to off load the property?

    Profile photo of CatalystCatalyst
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    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Talk is cheap. You haven’t even got finance approved so how can tyou convincingly say to the vendor that you can give a 30 day settlement?

    If someone offered a 30 day settlement with no conditions THEN I’d be interested.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Ollie,

    I’m currently in this situation on a interest in advance loan trying to get it all sorted before July 1 due to my 13-14 tax advantages,

    Do check with your Accountant (of course) but I believe Taxation is based on “Contract Date” and NOT Settlement Date. If I am right, maybe there is less need to rush for a full settlement by June 30?? Of course, others may be able to put me right if I’ve stuffed up – I recall CGT is based on Contract Date (and that is usually the biggest Tax issue for many).

    Benny

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes Benny – usually contract date.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of OllieOllie
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    @ollie77
    Join Date: 2014
    Post Count: 30

    Thanks Benny, that would be good and would definitely take the pressure off. The accountant said needed to have the funds drawn down to accrue the interest. Well check again

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
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    Thanks Benny, that would be good and would definitely take the pressure off. The accountant said needed to have the funds drawn down to accrue the interest. Well check again

    If you want to prepay interest then you have to be charged the interest before 30June of it will fall over next eyar.

    I just tried to do a prepay for a client with Homeside and they have now withdrawn this product, so hope they are not your lender

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Ollie,
    As Terryw said:-

    If you want to prepay interest then you have to be charged the interest before 30June of it will fall over next year.

    If you were planning on paying a year in advance, this would save you about $800 (based on a $400k loan with a 0.2% Interest saving – I think that is around the norm, yeah?) But, if you were to NOT pay the Interest amount in advance, these funds could instead be sitting in an Offset Account saving you Interest on a monthly basis anyway. How much would be saved?

    It would be worth running the numbers (one way vs the other) to see the true outcome of each way. e.g. by having ~$20k offset against a $400k loan, your monthly interest paid would be 5% less than if you had no Offset. And, you are paying in (slightly) inflated $$, while retaining flexibility of your funds too.

    Do the sums using YOUR figures though – and do let us know what transpires – I’d be keen to know, especially if one way is “streets ahead” of the other,

    Benny

    • This reply was modified 8 years, 6 months ago by Profile photo of Benny Benny.
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I think Ollie may want to bring the deduction forward to this year to offset this years income, which may be higher than it will be expected for next year.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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