You’ve found the house of your dreams, and you’ve got the title in your hands. You’ve checked all the details and you’re still keen to buy – now all that’s left to do is to sign the sale and purchase agreement, right?
Wrong. If you’re financing part of the purchase price through a bank or mortgage lender, you need to confirm your finances before you start the sale process. You need to do this even if you’ve already got pre-approval.
Why should you confirm your finances before buying a property?
Just because you’ve been given mortgage pre-approval, doesn’t mean your lender will agree to lend on a specific property. There are many reasons a lender may decide not to lend – the house could be in a bad location, the title could throw up red flags, the building inspection may reveal too much damage, or they may feel the price you’ve negotiated is too high in relation to the rateable value of the house.
How to confirm your finances
Simple – contact your lender with all the property information and ask them if you’re okay to proceed. If you’ve gone through a mortgage broker, they will take your chosen property to the lender on your behalf. If a lender is hesitant, your mortgage broker may be able to find a competing vendor all the property information and ask them if you’re okay to proceed. If you’ve gone through a mortgage broker, they will take your chosen property to the lender on your behalf. If a lender is hesitant, your mortgage broker may be able to find a competing vendor or negotiate on your behalf to get the mortgage you need.
The vendor may place additional conditions on the finance. For example, they may require you to get a property valuation before they release funds. You need to make sure any such conditions are added to the sale and purchase agreement, to ensure you can walk away from the sale should the vendor pull out.
You’ll be given a budget for the sale – the highest amount the vendor is willing to put up. If you go over this amount (for example, in an auction), you’ll need to come up with the rest of the money on your own. Remember that if you’re buying by auction you need to have your finances in order before putting in an offer. An auction offer is “unconditional”, which means you need to have arranged finance and performed your building inspection before the auction kicks off.
Once you’ve confirmed your finances, you’ll have a firm budget in place and you’ll be in the best possible position to go put an offer in on your dream home. Good luck!
If you’ve found a property you’re interested in buying, give Mike Whittaker a call to learn how we can help you get the best possible mortgage. Our services are completely free, so you have nothing to lose. Book your free no-obligation chat today on 0800 579 324.
