settlement duration - what to consider

[FHBSydney]

hi all, first home buyer here taking advantage of the 14k boost

i just made a verbal offer for a property and mentioned a 45 days settlement... i'm currently renting and would like to move in ASAP so i can get away with rental (finally!)

i noticed some people advices a longer settlement is favorable for buyers generally... why is this so?

I'm with St George bank and they are still processing my pre-approval. the bank says once i have a singed the contract and fax it to them, formal aprpoval takes 7 to 10 days... that sounds pretty quick to me, not sure if i understood them right... is 7 to 10 days within 'normal' range?

on the finance side, is there anything else i need to take into account as far as the settlement period is concern?

would 45 days be enough for the bank to release the fund to the vendor?what happens when settlment day passes and bank hasn't relased the fund to the vendor yet? could i get penalised for this?

sorry lots of questions from a newbie, i just didn't expect to find the property i would like so quick...

advices please

 

[Propertunity]

hi all, first home buyer here taking advantage of the 14k boost

Congratulations

i noticed some people advices a longer settlement is favorable for buyers generally... why is this so?

Makes no difference unless you don't want to pay for it in a hurry. In a rising RE market if you can delay paying, then the property is worth more than when you offered to buy it. This makes it easier to buy another one sooner and you have not drawn down the loan or begun paying interest. But for a FHB makes no difference at all.

I'm with St George bank and they are still processing my pre-approval. the bank says once i have a singed the contract and fax it to them, formal aprpoval takes 7 to 10 days... that sounds pretty quick to me, not sure if i understood them right... is 7 to 10 days within 'normal' range?

They could do it in 1/2 day if they got organised. But some banks are taking a long time - lack of staff etc.

on the finance side, is there anything else i need to take into account as far as the settlement period is concern?

Not really

would 45 days be enough for the bank to release the fund to the vendor?

the 'normal' NSW contract is 42 days from exchange.

what happens when settlment day passes and bank hasn't relased the fund to the vendor yet? could i get penalised for this?

The sale contract will lay out any penalties - read it before signing (or get your solictor's advice). Mostly not too much of a problem - there can be delays on both sides for all sorts of reasons.

All the best

 

[FHBSydney]

Congratulations

wow lightning fast reply, thanks!

just one more question if you don't mind....

i understand when i sign the contract and give in a holding deposit, it will be subject to a standard 5 days cooling off period... is it normal practice to put in specific duration, say 14 days, for finance approval, building / pest inspection? also what happens when finance gets disapproved or dragged on beyond the 14 days, do i loose my holiding deposit?


by the way, this is a really amazing site, would love to contribute too later when i've gained enough knowledge

 

[Propertunity]

wow lightning fast reply, thanks!

Can't always guarantee it just happend to be on when you were.

i understand when i sign the contract and give in a holding deposit, it will be subject to a standard 5 days cooling off period... is it normal practice to put in specific duration, say 14 days, for finance approval, building / pest inspection? also what happens when finance gets disapproved or dragged on beyond the 14 days, do i loose my holiding deposit?

See this thread for exactly the same Q:
http://www.somersoft.com/forums/showthread.php?t=49031

by the way, this is a really amazing site, would love to contribute too later when i've gained enough knowledge

Let us all know how you get on would be a good start

 

[Jacque]

Hi FHB

Don't stress too much about finance approval if it takes longer than anticipated. In my experience, this is all too common, and you really need to be constantly on your lenders back during the process to ensure it all happens. Once a copy of the signed contract with agreed price is sent to your lender, a valuation needs to ordered by the bank/lender to verify the value of the property (and to protect themselves should you go belly-up and not be able to pay them back!). Given that's all good, this is usually followed by a formal loan approval (unconditional) which is a great chunk of further paperwork you have to wade through and sign
Don't worry- your lender should help you out here, or your solicitor.

It's not uncommon for cooling off periods to be extended here in NSW, but don't rely upon it in a hot market, as savvy vendors will retain your 0.25% and relist if they know there's other buyers ready to pounce.

Best of luck with it all. Great time for FHB's like yourself

 

[man of action!]

i understand when i sign the contract and give in a holding deposit, it will be subject to a standard 5 days cooling off period... is it normal practice to put in specific duration, say 14 days, for finance approval, building / pest inspection? also what happens when finance gets disapproved or dragged on beyond the 14 days, do i loose my holiding deposit?

I would recommend your first step is find a "seasoned" real estate solicitor and discuss the best way to word your conditional offer so you have an "escape clause" and don't risk losing your holding deposit (or getting gazumped).

Small price for peace of mind.