All Topics / General Property / Benefits of a longer settlement period

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  • Profile photo of harvest316harvest316
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    @harvest316
    Join Date: 2008
    Post Count: 18

    I hear a lot of comments inferring that a longer settlement period is a good thing. Can anyone explain why exactly?

    Sorry, I havent bought a house yet…

    Profile photo of crashycrashy
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    @crashy
    Join Date: 2003
    Post Count: 736

    well you are exposed to any capital growth during this period, you can sell during this period (called a flip) for a profit without paying stamp duty, longer to get finance or sell another property, longer to get building approval….maybe more

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    crashy wrote:
    well you are exposed to any capital growth during this period, you can sell during this period (called a flip) for a profit without paying stamp duty, longer to get finance or sell another property, longer to get building approval….maybe more

    Hey, Crashy, what do you mean no stamp duty?
    If you have exchanged on a property you will be required to pay stamp duty if you onsell before you settle. I think every state in Australia you would be liable.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of C2C2
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    @c2
    Join Date: 2002
    Post Count: 518

    It has been suggested that a longer settlement in an upmarket can help with LVR avoiding MI depending on when your loan starts etc.

    Profile photo of harvest316harvest316
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    @harvest316
    Join Date: 2008
    Post Count: 18

    Thank you, people. I think I’m starting to get it.

    Profile photo of crashycrashy
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    @crashy
    Join Date: 2003
    Post Count: 736
    Profile photo of AnaAna
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    @ana
    Join Date: 2004
    Post Count: 79

    From a renovation point of view, we have organised to get early access in the past for the purposes of quote/measure or to actually start doing the demolition/ preperation/renovation during the settlement period.

    So having a longer settlement period has worked to our advantage as we have been able to do work prior to officially owning the property. In a couple of cases we managed to complete the full renovation during this period and have it back on the market straight away without incurring additional holding costs.

    Wishing you every success,

    Ana

    Profile photo of ducksterduckster
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    @duckster
    Join Date: 2004
    Post Count: 1,674

    You may be able to use a longer settlement as a bargaining point with the seller. As it gives the seller more time to organise somewhere else to live. They might bring down the price for the opportunity of saving interest from bridging finance.
    You do not usually pay interest on the loan until settlement occurs and you get capital growth in the mean time.
    It gives you some breathing space to organize finance The bank will love the extra time. 

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