Quick answer
When a buyer fails to settle, the seller still has every commitment that depended on the sale proceeds, such as a linked purchase, a maturing loan or a tax bill. A short-term private loan secured on the unsold property, or on other property, can meet those commitments on time. The loan is then repaid when the property is resold or the original buyer eventually completes.
Key points
- Your commitments do not pause because your buyer defaulted
- The unsold property is usually the best security and the resale is the exit
- Your solicitor manages the buyer's default; the loan manages your deadlines
- Interest can be prepaid or capitalised so cash flow is untouched while you resell
- Funding possible within 24–48 hours once documents are in
- Amounts
- $20k – $5m
- Term
- 1 to 24 months (first mortgage)
- Interest
- Can be prepaid or capitalised
- Assessment
- No formal valuation required
A sale that does not settle is two problems at once. The first is the buyer: chasing them, serving notices, deciding whether to end the contract and resell. That belongs with your solicitor. The second is everything you had lined up to pay from the proceeds, and that one has its own clock.
Most owners we speak to in this spot had planned well. The sale was exchanged, the buyer looked solid, and a linked purchase, a loan payout or a tax bill was timed to the settlement. Then the funds simply did not arrive. This page is about keeping your side of the ledger on time while the buyer problem is resolved.
How long until your own deadline falls due?
Your triage starts with your obligations, not the buyer’s. List every payment that depended on the sale and the date each one falls due.
| Time until your next deadline | What is realistic | First move |
|---|---|---|
| More than 3 weeks | Refinance the unsold property with a private first mortgage and run a calm resale | Send the failed contract and your payout figures this week |
| 1 to 3 weeks | A first mortgage over the unsold property, or a gap loan over it and another property | Get your current lender’s payout figure today |
| Under 1 week | A caveat or second mortgage for the amount due, if equity allows | Everything in one batch; warn the party you owe that funds are coming |
| Already overdue | Your own default is running | Fix the deadline that carries the heaviest penalty first |
If your deadline is a property purchase, remember PEXA only settles on business days. Funding is possible within 24–48 hours once documents are in, and $20k–$250k possible same day for property-secured amounts.
What happens to the sale when a buyer defaults?
Contract rights differ by state and edition, so treat the following as a map, not advice. The 2022 NSW standard contract gives a seller a useful picture of what is typically available:
- Termination. If the buyer fails to comply in an essential respect, the seller can terminate by serving a notice.
- The deposit. A terminating seller can keep or recover a deposit of up to one-tenth of the price.
- Resale and loss. The seller can sue for the shortfall on a resale made within 12 months, plus certain costs, or for damages.
In Western Australia, the 2018 Joint Form of General Conditions adds interest: if settlement is not completed within three business days after the settlement date, the defaulting buyer pays interest on the unpaid money from the settlement date.
Usually the first step is a notice to complete served on your buyer. Your solicitor will advise whether to wait, terminate or negotiate. None of those choices should be forced by your own cash position.
How it works: bridging your side of the deal
- Tell us what was riding on the sale. The linked purchase contract, the loan payout letter, or the ATO statement.
- Choose the security. The unsold property is the natural choice, because its resale is the exit. Other property can top it up.
- Settle the private loan. It pays your existing lender out, or funds the gap behind them, and provides the cash for your deadline.
- Resell or complete. Your agent re-lists, or the original buyer completes late.
- Repay at the resale settlement. The private loan is discharged from the proceeds.
For a property already being marketed with no buyer yet, our page on bridging until a property sells goes deeper on campaign timing.
Which structure usually fits?
| Your position | Structure | Why |
|---|---|---|
| Unsold property has a bank loan that must be repaid | Private first mortgage over it | Clears the bank and gives you 1 to 24 months to resell |
| Bank is happy to stay; you need extra cash for a linked purchase | Second mortgage behind the bank | Leaves the existing loan untouched |
| Small, urgent amount due this week | Caveat loan | Quick to put in place; can convert to a registered second mortgage |
| Equity is spread over two properties | First and second mortgages together | Combines headroom; see multiple properties as security |
Our short-term first mortgage page explains how the term is set against a resale timetable.
How does this compare with the alternatives?
| Option | Protects your deadline? | Catch |
|---|---|---|
| Wait for the buyer | Only if they settle in time | Repeat failures are common |
| Sell quickly at a discount | Rarely in time | Price loss can exceed the cost of borrowing |
| Ask your bank for an extension | Sometimes | Banks often want the sale proceeds on the agreed date |
| Delay your own purchase | If your seller agrees | Notice to complete and costs on your side |
| Private bridge over the unsold property | Yes, if equity and exit stack up | Costs more than a bank loan for the term |
Weighing a discounted sale against borrowing? Our comparison of borrowing against property vs selling it sets out the trade-offs.
What should you ask your solicitor this week?
The loan and the legal response run side by side, and each affects the other. Questions worth putting to your solicitor early:
- Has a notice to complete been served on the buyer, and when does it expire?
- If we terminate, when can the deposit realistically be released, and could the buyer dispute it?
- Can the property be re-listed straight away, or only once the contract is formally at an end?
- Which of my extra costs, including any bridging loan, might be recoverable from the buyer?
- Does my own purchase contract, or my lender, need to be told anything now?
The answers shape the loan term and how much of the resale price you can safely rely on.
Who it suits
- Business owners and investors whose sale of commercial, industrial or investment property collapsed
- Sellers with a linked purchase, a loan maturity or a tax debt timed to the proceeds
- Owners confident the property will resell, or that the buyer will complete late
- Companies, trusts and individuals borrowing for a business purpose
When this isn’t the right move
- The property is hard to sell at the price you need. If the buyer walked over a real defect or a price the market will not repeat, the resale exit is weaker than it looks.
- The deadline can be moved cheaply. If your own seller or lender will grant a short extension in writing, take it.
- The sale was of your home and the funds were for personal use. These loans are for business purposes only.
- The dispute will run for years. If the buyer contests termination and the property cannot be resold until it is resolved, talk to your solicitor before you borrow against the resale.
What it costs (without the guesswork)
Each loan is priced on the security, the loan-to-value ratio, the term and the exit, with the aim of the sharpest price your circumstances allow. You will see:
- Interest for the term, which can be prepaid or capitalised so there are no monthly repayments while you resell
- A small assessment fee, shown on the Letter of Offer and varying per loan
- Legal and registration costs for the loan, and discharge costs at the end
Keep receipts. Whether any of these are recoverable from the defaulting buyer is a matter for your solicitor.
Documents you’ll need
- The failed contract of sale and any notices served on the buyer
- The documents for the commitment you need to meet: purchase contract, payout letter or ATO statement
- Your agent’s plan and timetable for the resale
- Photo ID for borrowers, directors, guarantors and security owners
- Company or trust documents where relevant
- Payout figures for every loan secured on the properties offered
How fast can the bridge settle?
Funding is possible within 24–48 hours once documents are in. There is no formal valuation required: we assess the property directly, which also matters when you need a straight view on the resale. The slowest piece is usually your current lender’s payout letter, so request it the moment you know the sale has failed. Send us the failed contract and your deadline and a specialist will map the timing with you.
Illustrative example: the net cash picture
Illustrative example: a Geelong manufacturer sold its old factory for $1.6m to fund the purchase of a larger site, settling ten days later. The buyer’s finance failed and settlement did not happen. The factory carries a $420k bank loan the bank wants repaid, and the company needs $760k to settle the new site after its deposit. A private first mortgage over the old factory at an illustrative LVR band of 75% gives $1.2m of borrowing capacity.
| Step | Amount |
|---|---|
| First mortgage over the old factory | $1.2m |
| Less bank payout | $420k |
| Less capitalised interest allowance for nine months (illustrative) | $95k |
| Less loan costs | $15k |
| Cash for the new site settlement | $670k |
The company tops up the remaining $90k from trading cash and settles the new site on time. The old factory is re-listed, and its resale repays the private loan. This illustration is not a client record.
What happens if the original buyer comes back?
Sometimes the defaulting buyer finds funds a fortnight later and wants to complete. If your solicitor advises completing with them, the private loan is simply repaid at that settlement instead of the resale. Interest stops when the loan is repaid, and a loan with prepaid interest may have a different early-payout outcome, which the Letter of Offer sets out. Ask about early repayment before you sign.
Other urgent situations we fund
- Paying out an expiring private loan
- Paying an ATO debt with property equity
- Bank finance fell through on your purchase
Selling in Victoria? Our page for a private lender in Melbourne covers Victorian title and security detail. For the main product, see private first mortgage business loans.
Sale fallen over? See if you qualify
Start with the facts that matter: the property that did not sell, what is owing on it, the deadline you now face and the amount due. The enquiry takes about a minute, there is no credit check to enquire, and it is read by a specialist at one direct lender, not passed around a panel.
The clearer the figures, the more useful the first call will be, and the sooner you can get back to dealing with the buyer from a position of strength. Tell us what was riding on the sale.
Frequently asked questions
My buyer didn't settle on my warehouse yesterday and I'm due to settle on a new site in eight days. What are my options?
Keep the pressure on your buyer through your solicitor, and in parallel fund your own purchase. A private first mortgage over the unsold warehouse, or a gap loan over the new site and the warehouse together, can settle your purchase on time. The warehouse resale, or the buyer's late completion, then repays the loan.
Can I keep my buyer's deposit?
That depends on your contract and on whether you end it. Under the 2022 NSW standard contract, a seller who terminates for the buyer's default can keep or recover a deposit of up to one-tenth of the price. Your solicitor needs to advise before you treat the deposit as yours, and the money may not be released straight away if the buyer disputes the termination.
Should I terminate the contract or give my buyer more time?
That is a legal and commercial call for you and your solicitor. Giving more time keeps a known buyer, but your own deadlines may not wait. A bridging loan lets you make that choice on its merits, rather than because your own settlement or loan is about to default.
My existing bank won't extend the loan on the property I was selling. Can a private lender refinance it?
Yes. A private first mortgage can pay out the bank and sit over the property while you resell. That suits owners whose bank wanted the sale proceeds on a set date and won't wait for a second campaign.
Can I claim my extra loan costs from the buyer who defaulted?
Possibly, as part of a damages claim. The 2022 NSW standard contract lets a terminating seller sue for a resale shortfall within 12 months, plus certain costs, or for damages. Whether your bridging costs are recoverable is a question for your solicitor, so keep every invoice.
I sold an investment unit to pay out an ATO debt. Now the buyer has defaulted and the ATO is waiting. What can I do?
A loan secured on the unit, or on other property, can pay the ATO now, and the resale of the unit becomes the exit. Our page on paying an ATO debt with property equity covers how the money is sent to the ATO at settlement.
Is the unsold property good security if the market has softened?
It can be. We assess the property directly, with no formal valuation required, and look at what it should realistically resell for in your timeframe. If the price needs to come down to sell, factor that into the exit before you borrow against it.
How long a term should I take?
Long enough for a fresh campaign, exchange and settlement, plus a buffer. For many commercial and investment properties that means six to twelve months. Private first mortgages run from 1 to 24 months; second mortgages and caveat loans are usually shorter.
My buyer says they will settle next week. Should I still arrange funding?
If your own deadline is before or near next week, yes. Ask for the funding to be ready and only draw it if needed. Buyers who miss once sometimes miss again, and your obligations carry their own penalties.
Does the private lender care why my buyer defaulted?
Only to the extent it affects the resale. A buyer whose finance fell through says nothing about your property. A buyer who walked because of a defect in the building does, and we will want to understand it.
Can a company or trust borrow against property it owns for this?
Yes. Companies, trusts and individuals in business can borrow for business purposes. Trust lending needs the trust deed and the trustee's authority, which is worth gathering early.
My WA buyer is five days late. Is interest running in my favour?
Under the 2018 WA Joint Form of General Conditions, a buyer who does not complete within three business days after the settlement date pays interest on the unpaid money from the settlement date. Check which edition your contract uses and talk to your settlement agent about recovering it.
Can I enquire without a credit check?
Yes. There is no credit check when you first enquire, and your details go to one direct lender rather than being spread across many. A specialist reviews the property, the amount and the deadline, then tells you plainly whether the deal can work before you commit to anything.
What happens to the bridging loan if I end up keeping the property?
Then the exit changes to a bank refinance. That is a valid exit if it is realistic, but it should be planned rather than discovered at maturity. Tell us early so the term can be set to suit.