Finance Approval and Conveyancing
As a layperson, you’re likely to read through clause three in the Standard REIQ Contract that’s used in conveyancing and feel that your finance pre-approval satisfies its terms. In reality, though, that couldn’t be less true. In order to avoid delays or hold-ups during the conveyancing process, make sure that your financing is in proper order.
Clause Three and Finance Approvals –
The third clause of the Standard REIQ contract that is used in conveyancing concerns finance approvals. In order to satisfy the terms of the contract – and to proceed with the transaction – a buyer must have been approved for financing. Unfortunately, many would-be home buyers think that conditional finance approvals are sufficient; they are not. Under the terms of clause three, you must have clear, unconditional approval for financing.
When shopping for a new home, many prospective home buyers get pre-approved by banks and lending institutions. While this can give you a good idea about how much you can afford, and is generally a smart way to proceed, it is not the same as actually obtaining approval for financing. It’s simply a preliminary way to get a feel for what you qualify for in terms of a home loan.
The problem that often occurs is that prospective home buyers obtain pre-approval from a bank or a lending institution and begin shopping for a new home. Upon finding one, they begin the conveyancing process. When confronted with clause three, they inform the seller than it is satisfied because of their pre-approved status. In reality, clause three has not been satisfied. At this point, the seller’s real estate agent or other party informs the buyer that they have not met the terms of clause three, which leaves the buyer feeling completely lost and confused. Of course, buyers who have retained the services of a top-notch conveyancing solicitor don’t have to worry about inadvertently misunderstanding this important clause.
Don’t Be Left in the Dark –
In order to satisfy the terms of clause three, you have to have been approved for financing in order to purchase the house in question. This distinction may appear to be simple, but it is also critically important. Failure to understand the terms of this clause can trip up the conveyancing process and make it take much longer than it should. In the meantime, the house that you want could very easily slip between your fingers. For best results, always hire a reputable and experienced conveyancing solicitor to help you navigate the complex and complicated waters of the conveyancing process in Australia.