Can I Get Finance to Settle a Property Purchase Within Seven Days?

If you've purchased a property and settlement is approaching faster than your original finance approval, the situation can become stressful very quickly.

The question is, “can you get finance to settle a property purchase within just seven days?” The short answer is yes. In the right circumstances, specialist or private property finance can be arranged and settled within seven days, and sometimes even faster.

So, how does this work, and what should you do if you’re already in this situation? Let’s take a look.

The Key Factors at Play

The key factors are the strength of the security, the loan structure, how quickly information can be provided, and whether the lender can assess, value, document and settle the transaction within the required timeframe.

This is particularly important with an unconditional property purchase, where failing to settle can potentially put your deposit at risk and expose you to default interest and other consequences under the contract.

Traditional bank finance can work extremely well when there's sufficient time. But when settlement is only days away, the question can change from “Who has the cheapest interest rate?” to “Who can actually get this transaction settled?”

That's where specialist and private lending can become valuable.

Can Property Finance Really Settle in Three to Seven Days?

Potentially, yes.

There isn't a universal timeframe because every transaction is different. The lender still needs to be comfortable with the borrower, the security, the loan purpose and the proposed exit strategy.

However, specialist lenders can sometimes move considerably faster than conventional lending channels. This is usually because their assessment and approval processes may be more flexible and streamlined.

The ability to settle quickly can depend on:

• The property being offered as security
• The amount being borrowed
• The loan-to-value ratio (LVR)
• Whether additional security is available
• The borrower's circumstances
• The purpose of the loan
• The proposed exit strategy
• How quickly valuations can be completed
• How quickly legal documentation can be prepared
• Whether all parties are available to act immediately

When you're working within a three-day deadline, every one of those factors matters.

A Hodgestone Case Study: $2.8 Million Finance Settled in Three Days

A recent Hodgestone Finance transaction demonstrates what's possible when an urgent property settlement is structured correctly.

A commercial property investor purchased a retail freehold on the Mornington Peninsula for $2.8 million at auction. The purchase was unconditional.

Hodgestone had initially provided the client with a specialist private-finance solution. However, the client decided to pursue mainstream funding first.

Approximately three weeks later, the mainstream finance had not been secured. The client returned to Hodgestone with only three days remaining until the settlement date.

At that point, the stakes were significant and time was limited. The client had already paid a $280,000 deposit, and failing to complete the settlement could have exposed them to the loss of that deposit as well as potential default interest and other contractual consequences.

The client signed with Hodgestone late on Monday night.

Settlement occurred on Thursday afternoon.

How the $2.8 Million Facility Was Structured

Hodgestone arranged a $2.8 million specialist/private facility.

The newly purchased retail freehold was taken as first-mortgage security, together with an additional unencumbered property.

One of the important factors in meeting the deadline was that the lender had an in-house property valuation team.

In a transaction with these time constraints, waiting for an external valuation to be ordered, allocated, inspected and returned can all consume valuable time. Having valuation capability within the lender's own operation, however, helped to remove one of the potential delays.

The interest on the facility was fully capitalised, meaning the borrower wasn't required to make monthly interest repayments during the loan term.

The result was a structure that allowed the purchase to settle on time, protected the client's $280,000 deposit, and avoided the potential default-interest consequences of failing to settle.

What Was the Exit Strategy?

The nine-month facility was never intended to be a long-term funding solution.

As part of the original transaction, the client provided an additional unencumbered property as collateral security. Importantly, the client had already intended to sell that property independently of the new purchase.

The planned sale of that collateral property therefore formed the exit strategy for the short-term facility.

The property was subsequently sold, allowing the client to repay the private facility at around the six-month mark.

Because the facility had a four-month minimum interest period and interest had been prepaid for the nine-month term, the early exit resulted in the client receiving approximately three months of prepaid interest back.

This transaction had a clear beginning and end: urgent settlement, additional collateral security, capitalised interest, a planned sale of the collateral property, and repayment of the facility once that sale was completed.

Why Can Private and Specialist Lenders Move Faster?

A mainstream bank generally has established processes for credit assessment, valuations, documentation and approval.

Those processes can be appropriate when there's plenty of time available, but they aren't always designed around a borrower who says: “I have to settle this property on Thursday.”

Specialist and private lenders can sometimes approach transactions differently.

As an example, they may place greater emphasis on the underlying security, as well as the available equity, the transaction itself, and a clearly defined exit strategy.

Some lenders also have more direct access to decision-makers, valuers and legal teams.

That doesn't mean every private lender can settle every transaction in three days. It means that when a transaction fits the right lender's criteria and all parties can move quickly, there may be options available that aren't practical through conventional channels.

What Information Is Needed for an Urgent Property Loan?

If settlement is only days away, preparation becomes critical.

A broker will generally need to understand the transaction immediately, including:

• Purchase price
• Settlement date
• Property type and location
• Amount of finance required
• Existing deposit paid
• Available property security
• Existing mortgages or other debts over that security
• Borrowing entity
• Purpose of the loan
• Relevant financial information
• Credit history
• Proposed exit strategy

The earlier this information is available, the quicker a suitable lender can determine whether the transaction is viable. With urgent finance, incomplete information can cost valuable time.

What Is an Exit Strategy?

The exit strategy is particularly important with short-term and private lending.

Put simply, the lender wants to understand how the loan will ultimately be repaid.

Depending on the transaction, an exit strategy might involve refinancing into longer-term finance, selling another property, selling the security property, receiving funds from another documented source, or another clearly identifiable repayment event.

An exit strategy needs to be realistic.

Taking out short-term finance without a credible plan for repaying or refinancing the facility can create significant financial risk. Fast private finance works best when the exit is clearly understood before the loan is entered into.

Does Fast Finance Cost More?

It can.

Specialist and private finance will often be priced differently from mainstream bank lending. Depending on the lender and transaction, there may be a higher interest rate and additional establishment, valuation, legal or other costs.

But looking only at the interest rate can miss the bigger financial picture.

Consider the Mornington Peninsula transaction. The borrower had a $280,000 deposit at risk and only three days until settlement.

In that situation, the relevant question wasn't simply: “Is private finance more expensive than bank finance?”

It was also: “What is the financial consequence if I don't settle?”

That's the opportunity-cost calculation.

A cheaper loan that isn't available in time doesn't necessarily produce the cheaper outcome.

Equally, urgent private finance shouldn't be taken simply because it's available. The costs, risks and exit strategy still need to make commercial sense.

Example Scenario: Why Timing Can Matter More Than the Headline Rate

Let;s consider a hypothetical investor who purchases a commercial property for $2 million and pays a 10% deposit of $200,000.

Settlement is approaching, but their conventional finance isn't ready.

The investor might have two broad choices:

• Option one: continue waiting for conventional finance and risk failing to settle.
• Option two: investigate whether appropriately structured short-term finance can complete the purchase, then refinance or repay that facility under a planned exit strategy.

The second option may carry a higher financing cost.

But the proper comparison isn't simply the interest rate on Loan A versus Loan B. The investor also needs to consider the financial consequences of losing the transaction, putting the $200,000 deposit at risk, potential default costs, and losing the commercial opportunity itself.

That's why urgent finance decisions should be considered in the context of the whole transaction.

What Are the Risks of Urgent Short-Term Finance?

Speed doesn't remove the need for careful decision-making.

Borrowers should understand:

• The interest rate and how it's calculated
• Establishment and other lender fees
• Valuation and legal costs
• Whether interest is paid monthly or capitalised
• Minimum interest periods
• Early repayment conditions
• Default interest and fees
• The term of the facility
• What happens if the exit strategy takes longer than expected

A three-day settlement is only a successful outcome if the finance is also manageable after settlement. That's why the exit strategy should be considered before entering the facility, not several months afterwards.

What Should I Do if My Settlement Is Only Days Away?

Act immediately.

If conventional finance hasn't been approved and your settlement deadline is approaching, waiting another few days hoping that something changes can reduce the number of alternatives available.

Gather the basic information about the purchase, your available security and the finance you require, and speak with a broker experienced in urgent commercial property finance, specialist lending and private lending.

The more time available, even if it's only an additional day or two, the better the opportunity to assess different solutions.

At Hodgestone Finance, we've worked with borrowers where timing has become critical and conventional finance hasn't been able to meet the required settlement date.

As the Mornington Peninsula transaction demonstrates, three-day settlement finance can be possible in the right circumstances.

But every deal is different. The objective isn't simply to find fast money. It's to structure finance that allows the transaction to proceed while giving the borrower a realistic and clearly understood path out of the short-term facility.

Need Urgent Property Finance?

If you have an approaching property settlement and your existing finance isn't going to be ready in time, there may be alternative options.

At Hodgestone Finance, we work with specialist and private lenders across Australia. We can assess urgent commercial property transactions, and help to determine whether an alternative funding solution may be available.

The earlier you make contact, the more time there is to assess the transaction and structure an appropriate solution. If you’re searching for short term finance in Sydney or non bank lenders in Melbourne, Hodgestone Finance can help.

Call:1300 463 439 or get a free quote right here online.

Frequently Asked Questions

Can a private lender settle a property loan within seven days?

Potentially. Some specialist and private lenders can work within very short settlement timeframes when the transaction meets their criteria. The security, valuation, legal documentation, borrower information and exit strategy all influence how quickly settlement can occur.

Can finance be arranged in three days?

It can be possible in exceptional circumstances. Hodgestone has arranged a $2.8 million specialist/private facility where the client signed late Monday night and settlement occurred Thursday afternoon. This shouldn't be taken as a guaranteed timeframe for other transactions, as every application is different.

Do I still need a property valuation for urgent finance?

This depends on the lender and transaction. Valuation requirements vary. In urgent situations, the lender's valuation process can have a significant impact on the overall timeframe.

What happens if my bank hasn't approved my loan before settlement?

Your options depend on your contract and circumstances. If you're concerned about an approaching settlement, you should obtain appropriate legal advice regarding your contractual position and investigate alternative finance as early as possible.

Is private property finance more expensive than bank finance?

It can be. Interest rates, establishment costs and other fees may be higher than conventional bank lending. However, borrowers should consider the total cost of the finance alongside the potential financial consequences and opportunity cost of failing to complete the transaction.

Can interest on a private loan be capitalised?

Some facilities allow interest to be capitalised rather than paid monthly. This depends on the lender, available equity, loan structure and other factors. Capitalising interest increases the amount ultimately repayable, so the cost needs to be understood before proceeding.

Can I refinance a private loan after settlement?

Potentially. Refinancing into longer-term or lower-cost finance is one possible exit strategy for short-term lending. Whether it's available will depend on your circumstances and lending criteria at the time.

What is an acceptable exit strategy for a short-term or private loan?

An acceptable exit strategy is a realistic, identifiable way the loan will be repaid within its term. Depending on the transaction, that may include refinancing, selling another property, selling the security property or another documented repayment event. The exit should be considered before the short-term facility is entered into.

What should I do first if I need urgent settlement finance?

Contact an experienced broker as early as possible and have the essential transaction information ready. The purchase contract, settlement deadline, amount required, security position and proposed exit strategy are particularly important when time is limited.

This article provides general information only and doesn't constitute financial, legal or credit advice. Finance availability, interest rates, fees, lending criteria and settlement timeframes vary between lenders and individual transactions. Past settlement timeframes don't guarantee future outcomes. If you're facing a potential breach of a property contract or missed settlement, obtain appropriate legal advice regarding your contractual obligations and potential consequences.