At Victorian Property Settlements we believe knowledge is power, which is why we always recommend purchasers carefully consider their ability to obtain finance approval prior to entering into any contract of sale.
Anyone who is reliant on obtaining finance approval should ensure that the subject to finance particulars in a contract of sale adequately provide for them, including the time and amount needed.
It is always recommended you get advice specific to you prior to entering into any offer or contract, and this can be simply arranged by contacting our office at your earliest convience.
When a Purchaser has made a formal offer to purchase and has requested the sale be subject to a satisfactory finance approval it is quite natural to feel like the purchaser isn't fully committing, however in most cases this is a sign the purchaser is genuine in their intent to purchase, and is willing to incurr expenses on the transaction.
It is also quite common for purchasers to under estimate the time requied for thier bank to get back to them and to request an extension. This is often due to being given wrong advice or lender back logs, which has incresed since the royal comission into banking practices.
It is important that when purchasing a property you undertake all relevant checks and enquires about the property, they should also ensure that where they are relient on finance from a third party they have adequetly provided for this in the offer.
It is especially important that purchasers are aware that they do not have any rights to finance approval clauses in auction contracts.
It is not simply enough for a purchaser to have this clause, but that it adequately provides for the following details;
- amount required (including costs)
- time required for approval (as there is no guarantee that you will get a extension, despite it being quite prevalent. it is always better to be realistic rather than commit to something that isn't within the realm of possibility)
- your lender of choice
This function also requires you to have acted reasonably and prudently, it is not enough just to apply and be rejected to end a contract. IN many cases you are required to provide documentation that you applied within the scope of clause you asked for. For example; if your clause provided for finance approval of $300,000 and you applied and were rejected by a lender for finance of $350,000, a vendor has every right to refuse your request to end a contract and return the deposit to you.
For this reason it is important that you get specific advice from our office prior to making an offer.