Direct answer
Settlement and GST funding is short-term finance that covers a shortfall on a property purchase settlement, or the GST payable on a commercial transaction, until the purchase completes or the GST input credit is refunded by the tax office. In Australia it is secured by a caveat or second mortgage over the asset, typically funds in one to three business days, and runs from a matter of weeks up to twelve months.
Who uses it and why
Two related but distinct problems drive demand for this product. The first is a straightforward settlement shortfall: a purchaser is short of the funds needed to complete on settlement day, often because a sale on another property has been delayed, a valuation came in lower than expected, or funds from another source arrive after settlement is due. The second is GST timing: a commercial property transaction can trigger a GST liability payable at settlement, with the corresponding input tax credit only refunded by the tax office some weeks later, leaving a genuine cash-flow gap that has nothing to do with the underlying transaction's soundness.
In both cases the borrower has a clear, dated event that resolves the need — settlement completing, or the GST refund landing — and the facility exists purely to bridge that short window. Typical borrowers are purchasers facing a settlement shortfall, and developers, purchasers or SMSFs managing the GST timing gap on a commercial settlement.
Both scenarios share a feature that makes them relatively straightforward to fund despite the tight timeframe: the amount required is usually well defined, the timing of the exit is usually reasonably predictable, and the purpose is narrow and specific rather than open-ended. That combination — a known amount, a known timeframe, and a clear reason for the gap — is exactly what allows a lender to assess and settle a facility this quickly.
What lenders look at
Speed and certainty of exit dominate the assessment far more than a conventional serviceability review. Security is typically a caveat or second mortgage over the asset in question, with lenders lending to a loan-to-value ratio of up to around 75–80% including any existing encumbrance, and the specific dollar shortfall or GST amount is usually well defined and relatively modest against the value of the asset itself.
Because the exit is generally very short and very specific — settlement completing within days or weeks, or a GST refund with a known or estimated processing timeframe from the tax office — lenders focus heavily on confirming that exit is real and imminent: a signed contract of sale, evidence of the incoming funds, or documentation of the GST position and expected refund timing. Given how fast this product needs to move, documentation is low-doc or no-doc across the panel, and private lenders and specialist funds who can turn a file around inside one to three business days are typically the active part of the lender panel, though banks remain part of the broader panel Solara arranges through.
Credit history is read with real flexibility given how transaction-specific and short-dated this facility is — lenders will consider applicants with defaults on file, provided the specific settlement or GST event and the security supporting it stack up on their own terms.
Typical terms
|
|
| Size |
$50,000 to $5m, subject to lender assessment |
| LVR |
Typically up to 75–80% combined |
| Term |
From a few weeks up to twelve months |
| Speed |
Indicative funding in 1–3 business days from a complete application |
| Security |
Caveat or second mortgage over residential or commercial property |
| Pricing |
Priced on risk and security; indicative range on enquiry |
Structures we see most
Settlement shortfall bridge. Covers a specific dollar gap identified ahead of a settlement date, sized to the shortfall itself and timed to be repaid immediately once the settlement, or the delayed source of funds behind it, completes.
GST funding on commercial settlement. Advances the GST component payable at settlement on a commercial property transaction, repaid once the corresponding input tax credit is refunded by the tax office.
Deposit gap finance. Covers a shortfall on a deposit required ahead of exchange or settlement, distinct from the balance of purchase price, generally the smallest and fastest-moving structure in this category.
SMSF settlement funding. Structured for a self-managed super fund purchase where a specific, short-dated funding gap arises at settlement, assessed with the fund's limited-recourse borrowing structure in mind.
Rolling settlement facility. Used by developers or frequent purchasers who regularly encounter this timing gap across multiple transactions, structured as a facility that can be drawn against as each settlement requires it, rather than arranged fresh each time.
Auction settlement backup. Arranged as a contingency ahead of an auction or a tight private-treaty settlement, giving a purchaser certainty that funds will be available on the day even if a delayed sale or refinance elsewhere has not yet completed.
Costs and how we're paid
Pricing on settlement and GST funding reflects the speed required, the security offered and the very short term typically involved, and is quoted on enquiry once a lender has reviewed the specific shortfall and exit — no flat rate applies across the product. Facilities may carry an establishment fee and a minimum interest period given the short duration; all costs are set out in the loan offer before a borrower commits.
Solara is remunerated by the lender, the borrower, or both, depending on structure, which may include a commission from the lender and/or a broker fee agreed with the borrower. Any commission or fee is disclosed in writing before an application proceeds.
Given how short-dated these facilities typically are, the effective cost is better understood as a fixed amount for the funding period than as an annualised rate, and it is worth confirming the total dollar cost for the specific number of weeks or months involved before comparing it against the alternative of, for instance, delaying settlement.
Process and timing
- Initial scoping call — typically same day. We confirm the shortfall or GST amount, the security available, and the exact timing of the settlement or refund that resolves it.
- Document collection — typically same day. Contract of sale, title information, and evidence of the specific shortfall or GST position.
- Lender matching and submission — typically same day. We place the file with the private lenders and specialist funds best suited to the timeframe and security.
- Approval and offer — typically within 1 business day of a complete file.
- Settlement — typically 1–2 business days once terms are accepted, timed to meet the settlement date itself.
Frequently asked
What is settlement and GST funding?
It is short-term finance covering a specific shortfall on a property settlement, or the GST payable on a commercial transaction ahead of the corresponding input tax credit being refunded, structured to bridge a narrow, well-defined cash-flow gap.
How fast can this type of funding be arranged?
Indicative funding runs one to three business days from a complete application, since this product exists specifically to meet settlement deadlines that a conventional loan process cannot match.
Why would GST create a funding gap on a property settlement?
GST is generally payable at settlement on an applicable commercial transaction, while the corresponding input tax credit is refunded separately and later by the tax office, creating a timing gap between the cash going out and the credit coming back.
Can I use this facility for a shortfall caused by a delayed sale?
Yes — a settlement shortfall caused by a delayed sale on another property is one of the most common uses of this product, bridging the purchaser through to when those delayed funds arrive.
What security is required?
Typically a caveat or second mortgage over the property involved in the transaction, sized to the specific shortfall rather than the full value of the asset.
Can I get settlement funding with a default on my credit file?
Often, yes. Given how short-dated and transaction-specific this facility is, lenders will consider applicants with defaults on file, provided the settlement or GST event and the security supporting it are sound.
Is this the same as a caveat loan?
Closely related — many settlement and GST funding facilities are structured as caveat loans. The distinction is the specific purpose: this product is built around a defined settlement or GST event rather than a general working-capital need, and is priced and sized around that specific, dated gap.
What happens if the GST refund is delayed?
Borrowers should discuss timing with their lender in advance, since GST refund processing can occasionally take longer than initially estimated; most facilities allow for some flexibility in the exit timeline where genuinely needed, and keeping the lender informed early is generally straightforward to manage.
Can this facility be arranged for a residential, rather than commercial, settlement?
The GST component specifically applies to commercial transactions, but a settlement shortfall bridge can be used for either a residential or commercial purchase, provided the security and the exit are sound and the timing of the gap is clearly established upfront.
Related products
Caveat loans — the broader version of this structure, worth considering directly where the need is not tied to a specific settlement or GST event but is a general short-term cash requirement.
Bridging loans — the better fit where the gap being bridged runs longer than a settlement or GST timing issue, such as buying before an existing property sells.
SMSF commercial loans — worth pairing directly where the underlying purchase is itself an SMSF commercial property acquisition.