Case study: How to avoid settlement penalties

Connie Wilson was well on her way to becoming a first-home owner when issues cropped up prior to settlement that threatened to cost him her deposit.

Having found the house she wanted to buy and exchanged contracts for sale, Connie found herself considering a costly settlement extension due to unexpected problems with her deposit.

While she had thought that having a deposit sitting on her account would make the process simple, Connie had not realised that she needed to have the funds in her account for a minimum of three months before a lender would consider them genuine savings.

Her deposit, a gift from her parents, was due to reach the three-month milestone only nine days before settlement. Certain that she would need to apply for an extension, Connie spoke to an accredited finance broker to see how she should go about it.
“She had wanted to request a two-week extension on settlement, but I told him not to get the extension,” broker says, “it would have involved substantial penalty interest”.

Rather than having Connie foot a $400 per day bill for an extension, the broker jumped into organising a loan, using the strong relationships and knowledge gained over a decade in the industry to hurry the processes along.
“What I did was look at the different panels and the different policies, I called the BDMs and sent detailed scenarios to three lenders so that there were a few options in case one didn’t work out,” the broker explains.

“I managed to get a loan conditionally approved on the same day, subject to a valuation. The valuation came back the next day and it was formally approved”, the broker adds.

Not only did Connie’s broker find a suitable loan, she also used her expertise to ensure that it was approved on time, before settlement, without requiring an extension.

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