Finance Approval When Buying Property
Most Contracts of sale are subject to finance and unless you, as the buyer, approve or waive the finance condition under the contract by the due date the seller has the right to terminate the contract.
Before you approve your finance pursuant to the contract, you must obtain a letter of approval from your financier and preferably give a copy to your solicitor for their perusal.
Most banks will provide their standard letter which simply states that your finance is approved.
You as the buyer must ensure two things. Firstly, the finance approved must be unconditional and, secondly, the finance letter of approval documents the essential terms and conditions of your loan.
A satisfactory letter of approval should be unconditional and should state the following:
- the correct name of the borrower;
- the loan amount;
- the term of the loan;
- the interest rate (being both the higher and the lower interest rate);
- the default interest rate;
- the repayments on the loan amount;
- the security mortgage;
- the guarantors (if applicable);
- any special conditions of the loan.
All buyers should be aware of satisfying their finance condition under the contract without having an acceptable letter of approval from their financier. You don’t want to be in a situation where your finance approval is based on a verbal approval or a simple letter from your financier only to find that the approval was subject to certain requirements or was based on different terms and conditions of the loan as to what you expected.
Therefore, having a solicitor advising you on your contract can assist in both the purchase of your property and the heartache that can come with managing these affairs by yourself.
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