Contemporaneous Settlements and Lenders

Posted on Tuesday, January 20 2015

This is where one buyer (a Trader) gets property under contract and then on sells it. On the day of settlement the property contemporaneously settles so the Trader doesn’t need to draw on their own funding.

Lenders are cautious of Traders due to hydraulicing and misrepresented deposits.

The following is usually required:

Some lenders want the trader’s margin to be visible to the end buyer (i.e. the buyer knows how much the Trader purchased for.)

In all cases a Registered Valuation will be required.

The lender will also want the margin to be reasonable (ball park – $12,000 – $25,000 or 3% of purchase price.)

Contemporaneous settlements are still possible but lenders want to see a transparent process.

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Expert's Bio

John Bolton

John Bolton is the owner of Squirrel Mortgage Brokers. He is a regular market commentator and a previous GM at ANZ National Bank. Squirrel Mortgage Brokers are the independent mortgage experts.

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