Bank finance fell through before settlement: how to still complete

The call usually comes late. The bank’s credit team has found a problem with the property, the business financials, or a condition it now says was never met, and the approval you were relying on is gone or cut back. The contract, though, has not changed. The settlement date still stands and the vendor still expects the balance on the day.

This page is for buyers already inside that window. If settlement is still weeks away and you want to plan ahead, our guide to settling a property purchase on time is the better read. If the date has already passed, go to what to do with a notice to complete.

How much time is left before settlement?

Count business days, not calendar days. PEXA only runs financial settlements Monday to Friday, inside set hours that vary by state (in NSW, for example, 9.30am to 5.30pm). Every weekend and public holiday you lose is a day you cannot settle.

Business days left	What is realistic	First move
10 or more	Replace the bank with a private first mortgage, or keep the bank and fund the gap	Send the contract and bank’s reasons today; there is time to compare options
5 to 9	A full replacement or a gap loan, provided documents arrive in the first two days	Ask your solicitor to warn the vendor’s side that funding may change
2 to 4	Usually a caveat or second mortgage over a property you already own, for the gap	Everything in one email, plus a parallel request for a short extension
Settlement day	Only small, simple gap amounts, and only if documents were ready yesterday	Ask for an extension now; prepare for a notice to complete
Already passed	You are in default under the contract	Read the notice to complete page and call your solicitor

Smaller property-secured amounts of $20k–$250k are possible the same day, and funding up to $5m is possible within 24–48 hours once documents are in. “Possible” is the honest word: it depends on how fast the paperwork arrives.

Why does bank finance fall through so late?

Banks approve in stages. The conditional approval that let you sign was rarely the final word. The common late failures we see described by borrowers:

• The property came in low. The bank’s own assessment of the property was below the price, so it cut the loan.
• The credit team re-read the financials. A weaker quarter, an ATO debt or a new liability changed the picture.
• A condition could not be met in time. A lease, an accountant’s letter or a guarantor’s signature was missing.
• The bank changed its appetite. Certain industries, regional locations or property types moved outside its policy.
• Simple delay. The approval is still coming, just not before the settlement date.

The last one matters most. If the bank is late rather than gone, a short private loan that the bank refinances later is a clean fix.

What should you do in the first 24 hours?

1. Get the reason in writing. An email from the bank or broker saying what changed. It tells a private lender whether the bank is still a realistic exit.
2. Tell your solicitor or conveyancer. They need to know the settlement funding may change and may want to ask the vendor for a few extra days.
3. Work out the exact gap. Price, less deposit already paid, plus stamp duty and costs due at settlement, less any funds you still hold. Duty is often forgotten; see funding stamp duty on a purchase.
4. List your other property. Address, rough worth and what is owing on each, including your home if the purchase is for business.
5. Send it all at once. One complete enquiry beats five partial ones when the clock is running.

How it works: replacing or topping up the bank

There are two routes, and the days remaining usually decide between them.

Route A: replace the bank. A private first mortgage over the property you are buying funds the purchase. The bank drops out entirely. This avoids any need for a second lender’s consent and is often the cleaner option when there are five or more business days left. Our pillar on private first mortgage business loans explains terms of 1 to 24 months.

Route B: fund only the gap. The bank still settles, but for less than you need. A second mortgage or a caveat loan over another property you own covers the difference. It suits shortfalls rather than full withdrawals, and it works best when the bank’s approval is firm and only reduced.

On the day, the private lender joins the PEXA workspace as an incoming financier alongside, or instead of, the bank. Our guide to what happens at settlement walks through that step.

How does this compare with the alternatives?

Option	Speed	Keeps the deal?	Main catch
Ask the vendor for an extension	Same day answer	Yes, if they agree	They may refuse, or ask for late-settlement interest and costs
Another bank	Usually weeks	Only if time allows	Repeats the same credit process that just failed
Private first mortgage over the purchase	24–48 hours possible	Yes	Costs more than a bank loan; needs a clear exit
Caveat or second mortgage over other property	Same day possible for $20k–$250k	Yes	Puts a second property on the line
Walk away	Immediate	No	Deposit and damages exposure under the contract

For a wider look at a quick caveat versus a longer bridge, see caveat loan vs bridging loan.

Who it suits

• Business owners buying premises, a commercial unit, an industrial shed or an investment property held for business
• Buyers whose bank is late or has cut the amount, rather than refusing for good
• Owners with equity in other property, including companies, trusts and individuals in business
• Buyers who can name the refinance or sale that will repay the loan within months

When this isn’t the right move

Be honest with yourself here. A rescue loan is the wrong tool when:

• No exit exists. If every bank has declined and there is no asset to sell, a short-term loan delays the problem and adds cost.
• The property has a defect you have just discovered. It may be better to negotiate with the vendor or take legal advice about the contract.
• The purchase is your own home. These loans are for business purposes only.
• A short extension is on offer. If the vendor will give two weeks for a modest cost and the bank is genuinely close, that may be cheaper than any loan.

What it costs (without the guesswork)

We don’t publish a single price, because there isn’t one. Each loan is priced on the security, the loan-to-value ratio, the term and the exit, and we aim for the sharpest price your situation allows. The pieces you will see on the Letter of Offer:

• Interest for the term, which can be prepaid or capitalised, so there may be no monthly repayments
• A small assessment fee, which varies per loan and is shown on the Letter of Offer
• Legal and settlement costs for the loan documents and registration
• Stamp duty and the purchase costs you already owed, which the loan may cover

A second mortgage or caveat generally costs more than a first mortgage because the lender ranks behind the bank. Set those costs against what failing to settle could cost you.

Documents you’ll need

• The signed contract of sale and the settlement date
• The bank’s approval and its reason for withdrawing or cutting it
• Photo ID for every borrower, director, guarantor and security owner
• Company or trust details if either is buying (see company or trust-owned property)
• Addresses and payout figures for any other property offered as security
• A short note on the exit: the bank’s revised timetable, another lender’s interest, or a sale

How fast can a replacement loan settle?

The fastest settlements share three things. The documents arrive in one batch. The security is straightforward, such as a metro house, unit or commercial property with a clear title. And the borrower’s solicitor is ready to sign the loan documents the same day.

There is no formal valuation required, so there is no wait for a third-party property report, which is often where bank deals stall. Funding is possible within 24–48 hours once documents are in, and $20k–$250k possible same day. Send your contract and settlement date now and a specialist will tell you on the first call whether your date is realistic.

Illustrative example: what the numbers look like

Illustrative example: a Parramatta engineering firm has contracted to buy its leased factory for $1.4m, settling in six business days. It paid a $140k deposit and has cash set aside for duty and the rest of the balance, apart from the $1.12m loan its bank approved. After assessing the property, the bank offers $950k instead, leaving a $170k hole. The directors own an investment townhouse worth about $800k with $380k owing. Using an illustrative second-mortgage LVR band of 70% on the townhouse, there is headroom of about $180k. The bank still settles its reduced loan, and a second mortgage over the townhouse covers the gap.

Step	Amount
Headroom on the townhouse	$180k
Less capitalised interest allowance (six months, illustrative)	$14k
Less loan costs	$6k
Funds available at settlement	$160k

That lands $10k short of the gap, so the directors top it up from cash on hand. The exit is the bank refinancing the whole factory once the firm’s next annual accounts are lodged. In practice the plan would be tested on the first call, and the example is not a client record.

What is the exit after a rescued settlement?

A private loan that saves a settlement needs a credible way out within its term:

• The same bank, later. Common where the bank was simply slow or wanted one more set of accounts.
• A different bank or non-bank lender. Worth starting on the day after settlement, not in month ten.
• A sale. Of the property itself, another property, or a business asset.

Our guide to the exit strategy for a short-term mortgage shows how lenders test each one.

Other urgent situations we fund

• Bought at auction and need funds
• Your own buyer failed to settle
• Buying commercial property on a short timetable
• A settlement squeezed by the Christmas shutdown

Buying in Sydney or nearby? Our page on a private lender in Sydney covers NSW title and settlement detail.

Settlement at risk? See if you qualify

When a bank withdraws, every hour you spend chasing it is an hour not spent on the fix. Our enquiry takes about 60 seconds and involves no credit check. It goes to one direct lender, our lending partner fundU, rather than to a list of strangers, and a real specialist reads it.

Give us the settlement date, the amount you need on the day, the property you are buying and any other property you can offer, with what is owing on each. Exact figures let us say yes, no or “only if” on the first call. Check whether your settlement can be saved.