Can You Buy Your New Home Subject to Finance?
It's not unusual for someone to look for a new home before they actually sell their current one. After all, they want to know that they've got somewhere to go as soon as they agree to the terms of their current house. Yet it can be difficult to finalise terms on a new place without assistance from a lender or the assurance of a sale. What options do you have if you find yourself in this position?
Understanding Conditionality
As you look at your options, put yourself in the shoes of another property seller. They want to find a buyer as soon as possible without any confusion so they can make their own arrangements and settle whatever bills they have. So, there's a limit to what you can expect them to do in terms of giving you various options. In other words, you can't expect them to make any agreement conditional on you actually selling your current property, even though many people make an offer based on this scenario.
Subject to Finance
It's far more common for potential buyers to insist that a "subject to finance" clause is inserted within the particulars of the sale. In this case, you may not know whether a lender will finance the specific property, and you want to allow them time to decide. A buyer may agree to this clause so long as it is reasonable and has a specific date attached.
Getting into Detail
If you want to move forward with this type of contract, you probably need to identify the financial institution and include this information within the "loans" paragraph. You need to detail the amount sought, so you can pull out of the agreement if you are unable to raise as much as you thought. Finally, you will need to identify the decision date. This will be the last day you can pull out of the contract without any penalty if you have not received a decision or it was not in your favour.
Conditional Contracts
The contract becomes conditional when you have such a clause in place and the seller has agreed. You should make every effort to move the approval process along if you can and be ready to take action as soon as you get a decision. Don't forget that the conditional clause may be removed on the date specified unless you have exercised your option. Consequently, pay close attention to dates and timing so that you avoid the risk of any penalty.
Working with a Conveyancer
To make sure that everything goes as smoothly as possible and you don't run into issues, work with an experienced conveyancer. They'll ensure that the contract is in good shape and that your interests are protected as you move forward. For more information on conveyancing, contact a professional near you.
