Settlement is in 14 days and your loan isn't approved

You have exchanged contracts on a property. Settlement is in fourteen days, maybe less. And your bank has not approved the loan. Maybe the approval is still "in progress." Maybe the bank has asked for more documents. Maybe you have heard nothing at all. Whatever the reason, the clock is running and the consequences of missing settlement are serious. Our how it works page explains the general process, but this article deals specifically with time-critical scenarios.

What happens if you miss settlement

Missing a contractual settlement date exposes the purchaser to a range of consequences, depending on the contract and the jurisdiction:

• —Penalty interest. Most contracts provide for the purchaser to pay default interest on the purchase price for each day settlement is delayed. The rate is typically well above market.
• —Notice to complete. After a delay, the vendor can issue a notice to complete, giving the purchaser a final period (usually 14 days) to settle. If settlement still does not occur, the vendor can terminate the contract.
• —Forfeiture of deposit. If the contract is terminated, the purchaser typically forfeits the deposit. On a property worth $1 million, that is $100,000 lost.
• —Damages claim. The vendor may also have a claim for damages beyond the deposit, including any loss on resale.

The cost of missing settlement is almost always greater than the cost of arranging short-term bridging finance to meet the deadline.

The options when time is short

When settlement is imminent and bank approval has not come through, there are three main approaches. The right one depends on the amount you need, whether the property has an existing mortgage, and how quickly the bank is likely to complete its process.

Option 1: Private first mortgage

If you need the full purchase price (less the deposit already paid), a private first mortgage can fund the settlement. The private funder takes first-ranking security over the property being acquired. Once the bank approval comes through, you refinance to the bank and the private loan is repaid.

This is the most common bridging structure for time-critical acquisitions. The private loan is short-term (typically three to twelve months), and the exit strategy is the bank refinance that was always the intended long-term funding.

Option 2: Second mortgage for the shortfall

If the bank has approved part of the funding but there is a shortfall, or if you have an existing first mortgage on another property and need to raise the balance, a second mortgage can fill the gap. The second mortgage sits behind the existing first mortgage and provides the additional capital needed to settle.

A second mortgage requires the first mortgagee's written consent. In time-critical situations, we run the consent process in parallel with the funder's credit assessment to compress the timeline.

Option 3: Negotiate an extension

If the bank approval is genuinely imminent (days, not weeks), it may be possible to negotiate a short extension with the vendor. This is not always available, and the vendor is not obligated to agree. But if the vendor is willing, a short extension may be the simplest and cheapest option.

Be cautious here. "The bank said next week" is something borrowers hear repeatedly, and next week often becomes the week after. If you are going to negotiate an extension, have a private funding solution as a fallback so you are not relying entirely on the bank's timeline.

How fast can we settle?

When we arrange a loan through our panel of private lenders, five to ten business days from term sheet to settlement is the standard timeline. In genuinely urgent cases with clean documentation and a straightforward property, faster turnarounds are possible.

The timeline depends on several factors:

• —Documentation readiness. If the borrower has all documentation ready (entity details, property information, financials, signed authorities), the process moves faster.
• —Valuation. Most funders require a valuation. If a recent valuation exists or the funder will accept a desktop valuation, this step is compressed. If a full valuation is needed, it may take two to three business days.
• —Legal review. The funder's solicitor needs to review the title, prepare the mortgage, and handle settlement. Experienced solicitors who work regularly with private funders can turn this around in one to two business days.
• —First mortgagee consent (for second mortgages). If a second mortgage is involved, the first mortgagee's consent is often the rate-limiting step. Major banks typically take five to ten business days to process a consent request.

What to prepare now

If your settlement is approaching and your bank approval is uncertain, do not wait until the last day to explore alternatives. The earlier you engage, the more options you have.

• —Gather your entity documents (certificate of registration, ASIC extract, trust deed if applicable).
• —Have the contract of sale, title search, and any existing mortgage details ready.
• —Know your exit strategy. If the bank approval comes through, the exit is a refinance. If you are planning to sell, have a realistic timeline.
• —Engage your solicitor early. They will need to work with the funder's solicitor on settlement, and having both sides ready compresses the timeline.

Do not wait until settlement week

The most common mistake we see is borrowers waiting until the final days before settlement to explore private lending options. By that point, the timeline is extremely tight. We can still often help, but it is harder, and the stress on everyone involved is unnecessarily high.

If your bank approval is delayed and settlement is within three to four weeks, that is the time to engage. It costs nothing to have a conversation and understand your options. You may not need the private loan in the end, but having it available as a fallback means you settle on time either way.

For a broader view of the scenarios we handle, or to understand the full process, visit how it works. If settlement is approaching and you need to move now, submit your scenario and we will respond within 24 hours.