In this video we explain in 3 minutes the most common questions bankers and mortgage brokers are asked after finance is approved for QLD property / conveyancing...

We explain how much money is required, where the money needs to go, and when the money has to be ready for settlement!

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Hi everybody - George Sourris, Empire Legal.

Today's topic: Queensland Property Settlement Figures 2.0.

 Okay, so commonly asked questions that our bankers and mortgage brokers get after finance approval is: how much money do I need to pay, where do I need to pay it, and when do I need to pay it. 

Following on from last week's settlement figures, came a suggestion from the lovely Cara Haynes from Loan Market. Today, we are talking about Settlement Figures, version 2. 

There are 3 questions we need to unpack:

1. How much do I need to pay;

2. Where do I need to pay it;and

3. When do I need to pay it?

1. How much do I need to pay? Each loan is different but it's calculated on the purchase price + transfer (stamp duty) + legals + transfer fees. 

Let's do an example. On a $1M property, the transfer are $31,000 when claiming the home concession.

Plus transfer fees of $4,100 (broken down as $3,600 as the actual transfer fee, and then approximately $224 to release a mortgage, and $224 to register a new mortgage). For legal fees we budget approximately $2,000, although we are a little bit cheaper than that at Empire Legal. 

Obviously there will be the settlement pro rata adjustments to be calcualted - for rates, water, body corporate, etc. So, we tag on an extra $1,000-$2,000 as a buffer to make sure there's enough money ready by our clients when calculating the final settlement figures. So, in this example, when you add it all up, we're talking $1,039,000 - which is an additional $39,000 on top of the purchase price. 

Once we know the amount required, we deduct the funds the bank is bringing to settlement - which is the loan amount, less any fees and the deposit monies already paid - to work out what the shortfall funds are (aka the amount the client has to contribute out of their own money to complete the settlement).

2. Where do I need to pay the money? There are two places the money can go. Either A - in our trust account, or B - into a nominated linked shortfall account via the bank. For the above example, say the bank is bringing $800,000 and the buyer has already paid a $100,000 deposit, the shortfall of funds required to complete settlement is $139,000.

3. When do I need to pay? The funds have to be cleared and ready to go prior to settlement. We always work on preparing the settlement figures a week in advance  from settlement - to give our clients time to transfer it into our trust account or their nominated linked bank account.

If the funds are not ready and cleared in the correct location, the matter cannot settle, and the purchaser will be in breach of contract. Therefore, it is critical to ensure the monies are cleared and ready to go as early as possible. 

So, that answers the 3 most common questions that our mortgage brokers and bankers face. 

As always guys, please subscribe to our YouTube channel. We have 130 subscribers now! Thank you for your support. 

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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.