Quick answer
When settlement is days away and funds are short, confirm the exact shortfall with your conveyancer, find out why it exists, tell your lender and the vendor's representative that funds are being arranged, and line up secured funding immediately. A caveat or second mortgage over property you already own can often be arranged in days, with no valuation before approval.
Key points
- Confirm the exact shortfall, including duty and adjustments
- Understand why the gap exists before choosing a fix
- Keep the vendor's representative informed
- Line up secured funding immediately
- If settlement is missed, act fast on any notice to complete
Days, not weeks
You have exchanged contracts, paid a deposit and planned around a settlement date. Then, with days to go, the numbers do not add up. The bank has reduced its loan after a low valuation. Proceeds from another sale are delayed. Duty or GST is larger than expected. A co-investor has pulled out. Whatever the cause, the vendor is still entitled to be paid on the contract date.
This guide sets out a practical action plan for the days that matter.
Day one: confirm the exact gap
Ask your conveyancer or solicitor for a full settlement statement showing every amount due: the balance of the price, transfer duty, GST if applicable, adjustments for rates and levies, and costs. Compare it with the funds you have confirmed. The difference is the shortfall. Add a small buffer for costs of the solution.
Day one: understand why
The cause shapes the fix:
- Low valuation or reduced approval: the bank will lend less; you need to fund the difference.
- Bank withdrawal: the bank will not lend at all; you need to replace its funds. See bank finance fell through.
- Delayed sale proceeds: money is coming, just late; you need a bridge.
- Underestimated costs: a one-off gap to fill.
Day one: tell the right people
Tell your conveyancer what is happening and ask them to keep the vendor’s representative informed that funds are being arranged and when they are expected. Tell your purchase lender that additional funds are being arranged, and check whether it will consent to a second-ranking lender on the property being bought. Keep all communication in writing.
Day one or two: arrange secured funding
A short-term secured loan over property you already own is often the fastest solution. A caveat loan can usually be put in place most quickly; a second mortgage behind an existing home loan is another option. No valuation is needed before approval. Give the lender everything at once: property address, value estimate, mortgage statement, the settlement statement, the contract and your exit plan.
Start an urgent shortfall enquiry as soon as the gap appears.
Days two to four: documents and signing
Once terms are agreed, documents follow. Have your solicitor ready to review and witness them the same day. If anyone else owns the security property, make sure they are available for independent legal advice. Simple deals can fund within a day of signing.
Settlement day
Most settlements run electronically. The shortfall funds are usually paid into settlement alongside the main loan, so the purchase completes as planned. Confirm with your conveyancer that the funds are in place the day before.
When the date has already passed
Once the day is missed, expect a notice to complete that sets a short final deadline. The consequences depend on the contract and the state, but can include losing the deposit and claims for the vendor’s losses. Rescue is still possible then: a secured shortfall loan can often still save the purchase. Move immediately and keep the vendor informed.
Asking for a short extension
Sometimes a vendor will agree to a short extension, particularly if it can see funds are genuinely being arranged. Extensions may come with conditions, such as interest on the unpaid balance. Ask through your conveyancer and get any agreement in writing.
Illustrative example
Illustrative only. A physiotherapist buying her clinic premises learns four days before settlement that the bank’s valuation is lower than the price and it will lend less. Her conveyancer confirms the gap including duty. She enquires that afternoon with her home’s details and mortgage statement. A caveat loan is approved the next day, documents are signed the day after, and the shortfall is paid into settlement on time.
Planning the exit
Even in a rush, know how the shortfall loan will be repaid: a top-up from the purchase lender after settlement, selling a different asset, cash reserves or trading income. Set a realistic term. Use the exit strategy timeline if you have time.
Avoiding this next time
- get the full settlement figure, including duty and GST, before exchange
- build a buffer into your funding plan
- line up a backup funding source for large purchases
- avoid relying on sale proceeds that settle on the same day as a purchase
Common mistakes in the final days
- waiting for the bank to change its mind instead of arranging backup funds
- forgetting adjustments and costs
- not telling the vendor’s side until settlement day
- failing to have guarantors available to sign
Who to call, in order
- Your conveyancer or solicitor: confirm the exact figure and the contract position.
- Your purchase lender: confirm what it will lend and whether it allows a second mortgage behind it.
- A secured lending specialist: arrange the shortfall funding.
- Anyone who owns the security property: arrange their availability to sign and get advice.
- The vendor’s representative, through your conveyancer: keep them informed.
Making these calls on the first day can save the purchase.
Business purchases add complexity
When the purchase is business premises or a business with property, the shortfall may include GST payable at settlement, stock at valuation or additional transfer duty. Each needs to be confirmed in the settlement statement. A secured loan can cover all of them together, with the GST portion repaid when the input tax credit is refunded. See GST on commercial property.
Documents to have ready
Keep a folder with the contract of sale, the settlement statement, the purchase lender’s approval or correspondence, identification for everyone signing, details and statements for the security property, and evidence of the exit. Sending all of these with the first enquiry is the single most effective way to speed up funding. The settlement checklist lists them.
After settlement
Once the purchase settles, turn to the exit. If the plan is a bank top-up, start the application immediately while the valuation and settlement details are fresh. If it is a sale, list the property promptly. The sooner the exit begins, the lower the total cost of the shortfall loan, and the more comfortable the remaining term will be for the business. Diarise a weekly check on the exit until the loan is repaid.
Keep the purchase alive
Finding a gap days before settlement is frightening, though quick and organised action fixes most cases. Tell us the settlement date, the shortfall, the cause and the property you can offer, and a specialist will call you straight back. There is no credit check when you first enquire, your details stay with our team, and a settlement statement from your conveyancer lets us size the funding precisely. Get help now.
Frequently asked questions
What happens if I miss settlement?
The vendor can usually issue a notice to complete, and continued failure can put the deposit and further claims at risk, depending on the contract and state.
Can the vendor give me more time?
Sometimes. A vendor may agree to a short extension, possibly with conditions or costs. Ask through your conveyancer.
How quickly can shortfall funding arrive?
On straightforward deals, in as little as 24 hours once documents are signed.
What security can I use?
Usually another property you own, such as your home or an investment property, as a caveat or second mortgage.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a secured lending specialist calls you back.