17 August 2017

Many purchasers of property will have to borrow funds ie get a mortgage.  Yet the power of a cash buyer could mean that you may have the ability of getting your offer accepted over someone else’s or even better – getting the purchase price lowered.  So how do you get the power when you don’t have the money?   


When you make an offer to purchase a property the real estate agent (or solicitor if it is a Private Sale) will draw up a sale & purchase agreement.  If you, as a purchaser, have no conditions – including no finance clause – then the offer is “unconditional”.  Which makes it very appealing to a potential Vendor (seller)


However in order to make an unconditional offer you need to make sure that all the conditions that normally would go in to a contract have been met before the contract is drawn up.  So if you would normally want a valuation, building inspection etc then you arrange that first before making your offer. 


It is the same with the finance.  You get all your finance sorted before making your offer.  This means that you need to get pre-approval for a loan to purchase a property even if you haven’t found a property to purchase.  This allows the lender to be comfortable with the level of borrowings that you are looking for.  NB the loan approval will be subject to a lender being happy with the property that you are going to buy.


Once you have the pre-approval and found the property that you want to purchase, make sure you advise your real estate agent that your finance has been approved (this allows them to go to the vendor knowing that your offer is genuine and that you are a serious buyer).  Get them to draw up the sale & purchase agreement but before signing take the agreement to your solicitor to get them to go through it and highlight your obligations.  Then take your (unsigned) contract to your mortgage broker or lender to check that the property address is suitable.  This is imperative especially in this area as there are many non-standard residential properties which may affect a lender’s approval.  Flats, apartments, lifestyle properties, farms, commercial properties Industrial properties are all considered non-standard residential properties.  Some properties on Maori title may affect the loan approval as well.  It is not to say that a lender won’t lend on these properties but it pays to check with them that they are happy to take security over the particular property in question.


We recommend the loan approval given is ALWAYS in writing.  So many times we hear of people who have spoken with “someone from the bank” who said their loan is approved but when a house has been chosen and it comes time for the formal application to go in the loan is not approved at the level the client requires.  At the end of the day a verbal approval is only worth the paper it is written on!


Published In The Whakatane Beacon

This post was written by

Trish Marsden - who has written 96 posts

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