Settlement Funds Shortfall Calculator NZ

Updated  Your solicitor issues the actual settlement statement. Ask for the figure and the deadline as soon as you go unconditional.
Quick answer On an $800,000.00 purchase with $80,000.00 already paid, your solicitor needs $722,854.66 in the trust account on settlement day, not the $720,000.00 balance of the price. Against $705,000.00 of loan, KiwiSaver and cash that leaves you $17,854.66 short.

The settlement statement is the last document in a house purchase and the first one most buyers have never seen before. It arrives a few days out, and it is routinely larger than the number people have been carrying in their heads, because the balance of the purchase price is only part of what settles on the day. The solicitor's fee is on it. The registration fees are on it. The rates the vendor has paid in advance for months you will own the house are on it. None of that gets invoiced later; all of it has to be sitting in the trust account in cleared funds before anything can happen. The gap between what people expect and what is actually required is usually a few thousand dollars, which is a manageable problem three weeks out and a serious one on the day.

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The purchase
What else settles on the day
What will be there
The trust account will be $17,854.66 short on settlement day.
Needed in the trust account
$722,854.66
$2,854.66 more than the balance of the price
Will be there
$705,000.00
loan, KiwiSaver, cash and grants
Shortfall
$17,854.66
to find before settlement

What settlement requires

Purchase price$800,000.00
Less deposit already paid$80,000.00
Balance of the purchase price$720,000.00
Solicitor's fees$1,800.00
Registration and searches$150.00
Outgoings apportionment$904.66
Anything else on the statement$0.00
Needed in the trust account$722,854.66

What will be in the trust account

Loan drawdown$600,000.00
KiwiSaver withdrawal$60,000.00
Your own cash$45,000.00
Grants or subsidies$0.00
Total available$705,000.00
Shortfall$17,854.66

The costs people forget

CostAmountWhy it is easy to miss
Solicitor's feesFeels like a bill that arrives later. It does not, it settles on the day
Registration and searches$150.00Small, but nobody budgets for it because nobody is told about it
Outgoings apportionment$904.66Reimbursing the vendor for rates they paid covering months you will own
Anything else on the statement$0.00Lender establishment fees and bank cheque fees can appear here
On top of the price$2,854.66

These add $2,854.66 to what you thought you needed. On their own they are not large, and they are the difference between settling and not settling.

Your solicitor issues the settlement statement and their figure is the one that matters. This page is a check you can run early, not a substitute for it. The funds have to be in the trust account in cleared funds before settlement, and your solicitor will give you a deadline that is usually the working day before at the latest. Bank transfer limits and interbank timing catch people out regularly, so move money early and in stages rather than in one payment on the morning. If the valuation came in below the purchase price your lender will advance against the valuation rather than the price, so enter the drawdown they have confirmed rather than your approval. Failing to settle on time puts you in default and default interest runs from the settlement date at the rate the agreement specifies.

Settlement is a single payment, not a series of bills

The mental model most buyers have is that they pay for the house and then, over the following weeks, various invoices arrive for the lawyer and the council and everything else. That is not how it works. Settlement is a single simultaneous exchange: your solicitor pays out everything owed and receives the title, and every cost associated with the transaction is netted into that one movement of money. If the trust account is short by two thousand dollars, settlement does not happen, and the fact that you could easily have paid it next week is irrelevant.

The apportionment is the one nobody sees coming

Legal fees at least get quoted. The outgoings apportionment does not appear in any conversation before the settlement statement arrives, and it is a reimbursement to the vendor for rates and levies they have paid covering a period you will own the property. It can run to well over a thousand dollars depending on where in the rating year settlement falls and how far ahead the vendor had paid. It can also go the other way and reduce what you need, if the vendor has paid nothing and a bill is coming to you covering months they owned. Either way it is not predictable without the numbers.

The drawdown is not the approval

Your approval is a ceiling and the drawdown is what actually arrives, and the two differ whenever the bank's valuation comes in below the purchase price. In that situation the lender advances a percentage of the valuation rather than of what you agreed to pay, and the difference becomes cash you have to find. This is the single most common cause of a large settlement shortfall, and it is why the drawdown field on this page asks for the confirmed figure rather than the approved one.

Worked example

A purchase at $800,000.00 with $80,000.00 already paid as a deposit leaves a balance of $720,000.00. On top of that the settlement statement carries $1,800.00 of solicitor's fees, $150.00 of registration and searches, and an outgoings apportionment of $904.66 owed to the vendor for rates they have paid in advance.

That means $722,854.66 has to be in the trust account, which is $2,854.66 more than the balance of the price.

Against that the buyer has a loan drawdown of $600,000.00, a KiwiSaver withdrawal of $60,000.00 and $45,000.00 of their own cash, so $705,000.00 in total. They are $17,854.66 short, and they need to know that now rather than three days before settlement.

How this is calculated

The balance of the purchase price is the price less the deposit already paid on signing. The total needed in the trust account is that balance plus the solicitor's fees, the registration and search fees, the outgoings apportionment and anything else appearing on the statement. The apportionment is entered as a positive figure where it is payable by you to the vendor and as a negative one where the vendor is crediting you, so it moves the total in either direction. Funds available are the loan drawdown plus the KiwiSaver withdrawal plus your own cash plus any confirmed grant. The shortfall is the difference between the two, and a negative shortfall means there will be money left over.

Official sources

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Frequently asked questions

What costs come out of settlement rather than being billed later?

More than most buyers expect. The balance of the purchase price is the obvious one, but your solicitor's fees, the registration and search fees, and the outgoings apportionment owed to the vendor for rates and levies they have paid in advance are all settled on the day. That means the money has to be in the trust account beforehand, not paid out of your next pay.

When do the funds have to be with my solicitor?

In cleared funds before settlement, and your solicitor will tell you the deadline, which is normally the working day before at the latest. Bank transfers between institutions can take longer than people assume and daily transfer limits catch buyers out regularly, so moving money in one large payment on the morning of settlement is a bad plan. Ask your solicitor for the figure and the deadline as soon as the agreement goes unconditional.

Can my KiwiSaver be used for settlement?

Yes. A KiwiSaver first home withdrawal is paid by the provider directly to your solicitor's trust account and applied at settlement, which is exactly what it is designed for. The application has to be made in advance and providers need notice, so start it as soon as the purchase is unconditional. It is only at auction, where a deposit is payable on the day, that KiwiSaver cannot help.

What if the valuation came in below the purchase price?

Then the lender advances against the valuation rather than the price, and the drawdown is smaller than the approval suggested. The difference is a shortfall you have to cover in cash. Enter the actual drawdown your lender has confirmed rather than the approved amount, because the approval is the ceiling and the drawdown is what will arrive.

What happens if I cannot settle on time?

You are in default under the agreement. Interest normally runs at the default rate specified in the contract from the settlement date until you do settle, and if the delay continues the vendor can eventually cancel and pursue you for their loss. A short delay is usually survivable and expensive. The way to avoid it is to check the arithmetic weeks out rather than days out.