Confused: Settlement tomorrow and LOC

[cceasy]

Hi all,

I'm hoping someone can please explain this to me in noob language. So settlement is happening tomorrow for my investment property. I'm using my equity from my PPOR. So I have LOC plus the mortgage for the investment property. Upon settlement, I understand they will take money for the 20% depoist, plus stampt dutie and legal fees from the LOC. So with the excess funds left over from the LOC, how do I receive it? Does my solicitor give me a cheque or transfers to my account or is it a separate account with my lender?

Really confused as to what to expect... Speaking to my broker he's telling me I have to wait til after settlement and my solicitor will write me a cheque... If that's the case why did I receive a letter from the letter with 3 loan accounts? 1 for my originaly mortgage for PPOR, one for the LOC and one for the investment property?

 

[Peter_Tersteeg]

Normally the funds to complete the purchase (deposit you still have to pay and stamp duty, etc) will be deducted directly from the LOC.

It sounds like everything is being set up to settle on the same day which is a bit unusual but not a problem. In this case the surplus funds from the LOC should simply be put back into the LOC. In most cases this would occur automatically.

Your solicitor should never see any money directly themselves. I can't imagine why they'd need to write you a cheque.

Did you move lenders to put this structure in place? In that case your existing mortgage would have definitely have been refinanced to achieve this outcome, hence the 3 letters. It's not unusual for this to happen even if it all stays with the same bank.

 

[thatbum]

Why would you be receiving the excess funds from the LoC after settlement?

 

[cceasy]

ah now that makes sense... I was wondering the same thing... Why would I receive excess funds from the LOC... My broker told me that I will get a cheque

 

[Terry_w]

The bank would just debit the LOC account to write cheques for the settlement.

 

[cceasy]

Thanks guys... I can always count on you guys for some easy to understand replies

 

[Brady]

In some cases I've seen the deposit refunded back via bank cheque at settlement. And then full funds that were borrowed were used at settlement.

 

[albanga]

Not directly related but regarding settlement. I had a split loan with bankwest (brother and I) and we refinanced to ANZ and also created a third split to fund our subdivision process.
Now my brother and I both had money in our redraw so On settlement the total amount in our redraws (along with the subdivisin funds) was put into the offset of the third split. This is all well and good except Bankwest cannot tell me what was in my redraw and what was in my brothers. Luckily the amount was minimal and I had a spreadsheet that has allowed me to I think get within $100 but still thought it was a bit poor they could not easily tell me this.

It has been escalated and I'm awaiting for a response but just wanted to raise this, any brokers seen this before? The guy at BW said he has been there for 3 years and this is the first time someone has asked this.

 

[cceasy]

If settlement happens at 2:30 tomorrow, would the Line of Credit be available on the same day or the following day?

 

[Peter_Tersteeg]

If settlement happens at 2:30 tomorrow, would the Line of Credit be available on the same day or the following day?

Already replied to your PM, but it depends on the lender. Some open the account fairly quickly, for others it can be an overnight process.

Some banks still have computer systems that date back to the 80s.