Settlement day is coming and finance isn't ready: fast options for business property

Why do business property settlements go wrong?

Most commercial and business property deals that miss settlement don’t fail because the buyer can’t afford the property. They fail on timing. The bank’s credit team wants another set of figures. A valuation comes in late or low. A lease needs reviewing. A guarantor is overseas. Meanwhile, the settlement date in the sale and purchase agreement doesn’t move.

Late settlement can mean penalty interest and costs under the agreement, and if it drags on, the vendor may be able to cancel — taking your deposit with it. That’s the scenario fast property lending exists for.

What are the options?

Option	Security	Speed	Fits
Settlement extension	—	Depends on the vendor	Bank is close; vendor is reasonable
Private first mortgage on the purchase	The property being bought	Up to $5m possible within 24–48 hours	No existing lending on the purchase; refinance planned
Second mortgage on another property	A property you already own	$20k–$250k possible same day	Gap is part of the price, e.g. deposit top-up
Caveat-style loan on another property	A property you already own	Among the fastest	Very short gap, certain exit
Combination	Several	Varies	Larger purchases with several moving parts

Should you ask for an extension first?

Almost always. Ask your lawyer to approach the vendor’s lawyer as early as possible. A short extension — sometimes with a fee or penalty interest — may cost less than bridging finance. Many vendors would rather wait a week than restart a sale. If the vendor won’t extend, or the bank’s timeline is genuinely uncertain, bridging becomes the safer path.

How does bridging finance for a purchase work?

1. The private lender assesses the property being bought (and any other security) and your exit plan.
2. It lends against that security within its loan-to-value limit, alongside your deposit.
3. Settlement happens on time.
4. Your bank completes its process and refinances the private loan.

The faster and more certain step 4 is, the more comfortable the private lender — and the better the terms. A letter from your bank confirming where its approval is up to is very helpful.

Illustrative example. A Hamilton engineering company is buying the industrial building it leases for $2.4 million. Its bank has approved in principle but needs a building report and updated valuation that won’t arrive before settlement. A private first mortgage over the building, possible within 24 to 48 hours, settles the purchase on time. Six weeks later, the bank completes its process and refinances the private loan. The bridging cost is weighed against the risk of losing a deposit and the property.

What if the gap is only part of the price?

Sometimes the bank will lend most of the price on time, but a shortfall appears — a lower valuation, a bigger deposit requirement. In that case, a second mortgage or caveat-style loan over another property you own can fill the gap. Our caveat vs second mortgage page compares those two quick routes, and first vs second mortgage explains ranking and cost.

To see how much equity your existing properties could provide, use the property borrowing calculator.

Settlement in days? Get a timing answer now.

What should you have ready?

• The signed sale and purchase agreement and settlement date.
• Evidence of your deposit and any conditions satisfied.
• Details of the property being purchased, including any leases.
• Details of any other property you could offer as security, with current lending.
• ID for every borrower, guarantor and owner.
• A letter or email from your bank on the status of long-term finance.
• Your lawyer’s contact details — they’ll be central to a fast settlement.

What happens on settlement day?

On the day, your lawyer coordinates the money: your deposit (usually already paid), the bridging lender’s advance, any bank funds that are ready, and the vendor’s lawyer’s settlement statement. The bridging lender’s mortgage is registered on the title at the same time as the transfer. For this to happen smoothly:

• The lender needs its documents signed in advance, usually a day or two before settlement.
• Your lawyer needs the lender’s settlement figures early.
• Insurance must be in place on the property from settlement, noting the lender’s interest.

If any of these are late, settlement can slip even with funding approved. Ask the lender and your lawyer to agree a timetable as soon as approval is given.

What’s the exit?

The exit for a settlement bridge is almost always a refinance to your bank. The questions to answer before signing: what does the bank still need, when will it have it, and what’s plan B if the bank declines? A longer private term, another lender or selling a different asset are all possible plan Bs — the point is to have one.

What are the risks?

• The refinance falls through. If the bank ultimately declines, you need a plan B: a longer private loan, a different bank or a sale.
• Valuation gaps. If the property is worth less than the price, the lender lends against the value, not the price.
• Cost if the bridge runs long. Bridging is priced for weeks, not years.
• Director duties. Directors should only commit the company to obligations it can reasonably meet. Make sure the long-term finance and the business’s cash flow support the purchase.

For a broader view of when private lending suits and when it doesn’t, read bank vs private lender and private mortgage business loans.

Protect the deposit and the deal

When a settlement is at risk, every hour counts. Asking us what’s possible involves no credit check, and your file goes to one specialist rather than out to a list of lenders. Give us accurate details — the settlement date, the price, your deposit, any other property and exactly where the bank is up to — and we’ll tell you quickly whether a bridge can get you over the line. Start your application.