Getting the settlement date right!
The last 12 months have seen an unprecedented spike in residential sales in the industry. Looking to housing data from the Australian Institute Health and Welfare (AIHW) it’s quite clear that SA property as a whole is booming. We are certainly pleased to see such a boom in the property market for our local area’s and wonderful State of South Australia.
This boom does however have flow on effects, in particular for the banking sector. The Lending commitments to owner occupier households in SA (not including refinances) totalled $688,500,000 in February 2020. A year later in March 2021 the lending commitments totalled $1,298,700,000. View stats here.
This jump has created huge back log, particularly for the big banks, forcing them to extend their processing times for Discharge of Mortgages & New Loans. Previously, we could lodge a Discharge of Mortgage form with an estimated turnaround time for settlement being a short 2 weeks / 10 business days. Now, the banks are working on 25 – 30 business days to turn around a full discharge (partial discharges for cross collateralised loans are even lengthier). That’s 5-6 weeks from receipt of the discharge paperwork.
Similarly, banks are also finding it hard to process new loan applications or loan documents in a timely manner. We don’t believe it will be this way forever, but for the foreseeable future at least, these lengthy times will be the new normal.
Our aim is to always settle on time. We work very hard as conveyancers to avoid delayed settlements, requesting addendums, or creating licences to occupy as they can be costly to you – our clients. Often, this is out of our control. But there are simple steps that you can take to help avoid these situations too:
Choose your conveyancer early
If your property has just gone on the market, have a think about who your conveyancer is. As soon as you’ve accepted an offer, regardless of any special conditions, we recommend you touch base with us early. We will review the title and provide you with the correct discharge form for completion. Ensure you disclose to us if your mortgage is linked to another property – it’s important to fill a discharge out correctly for cross collateralised loans to save time down the track.
Make sure you speak to the professionals to help guide you with appropriate dates before you sign a contract. If you haven’t chosen your bank just yet, you will likely have a couple lenders in mind anyway. As conveyancers, we’re dealing with banks daily. We can guide you on how they are roughly tracking with turnaround times. Alternatively, if you are going through a Mortgage Broker – get their advice! Check it over with us. We will work with them to ensure you are protected in the contract.
Things to Remember
Discharge Authorities can sit with a bank for months, at no cost to the vendor. So any delays or terminated contracts due to a declined finance will only mean that we are well organised for the next contract.
You might not be paying your mortgage off anymore, but that doesn’t always mean it’s been discharged from your title. Sometimes your mortgage is at NIL debt for years but still registered which can surprise people! Remember to get your conveyancer to check your ‘freehold’ title too – just in case your mortgage from 20+ years ago has been hiding on there all this time.
Pre-approval is great, but it is not formal finance approval. Unfortunately it does not speed up your application or help you jump the queue! Don’t put in shorter time lines because you’ve had pre-approval. You will still need to consider the same time frames as everyone else.
Johnston Withers Lawyers and Conveyancers – We’re here to help!
Johnston Withers Lawyers and Conveyancers understand how overwhelming buying or selling a home can be. If you are currently in the market and you’d like advice, please contact Victoria Hughes on (08) 8842 1132 or get in touch online.