Going Unconditional
Meeting Finance Conditions
You will need to meet all the conditions detailed in your letter of offer from your bank of lender before the date you have agreed for finance in the Sale and Purchase Agreement.
You should, in the first instance, provide your solicitor with a copy of the signed Sale and Purchase Agreement, they will commence undertaking of due diligence relating to the LIM (Land Information Memorandum) and property title searches. You solicitor will advise you of any issues identified.
You should also provide your broker or bank with a copy of the signed Sale and Purchase Agreement so they can approve the property as suitable security for your loan
One of the finance conditions you may have to meet is obtaining a Registered Valuation – you should arrange this as soon as possible as sometimes valuers have busy periods and you may have trouble finding a valuer who can undertake a valuation and complete the report within the time required.
So what is a Registered Valuation?
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A Full Market Valuation is:
Completed by a Registered Valuer
Based upon a full inspection of the property as well as related sales in the area being analysed
Typically used for a variety of reasons, including securing finance when buying.
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You will need to ask your valuer to address the valuation to the bank or lender that is financing your property purchase.
You should also check that the valuer you have selected is approved by the lender or bank providing finance. If you choose a valuer who is not approved by your lender you may end up having to pay for a second valuation – so best to check first!
If the report completed by a Registered Valuer highlights any structural concerns or serious issues, the bank/lender may require you to obtain a building inspection to investigate these issues further. You should not rely on the valuation to identify any structural issues with the property, as this is not the role of the valuer.
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In this situation, it will depend on what your loan to value ratio is. The lender or bank will always work on the lowest of the purchase price or the valuation. In other words the bank will lend up to their maximum on either the valuation or purchase price (whichever is the lowest). You may wish to consider negotiating for a reduction in price with the vendor if it appears that you have offered more than the property is worth. Otherwise you will need to fund the difference yourself.
Builders Report
If you are looking to purchase a property it is likely to be one of largest purchases you will make in your lifetime, so it makes sense to get it checked out. A building inspection will give you peace of mind regarding the structural integrity of the property, as well as looking for signs of leaky house syndrome and other hidden damage within the property. Often building reports are not undertaken as it is an additional cost, however it can be an expensive mistake to purchase a property with problems that may later cost thousands to remedy!
What happens if the Building Inspection reveals problems? The builders report can identify problems ranging from minor to major. So depending on the extent of the problem you can either proceed with the purchase, decline to proceed with the purchase, or negotiate with the vendor to either repair the problems or reduce the price to take in to account the cost of repairs.
Bank/Lender Confirms Finance
Once you have provided the bank or lender with all the documentation they require and all conditions have been met to the satisfaction of the bank/lender, you should receive an ‘unconditional letter of offer’. In the event that you are verbally advised, please request a formal letter from the bank or lender confirming that they have unconditionally approved your finance. You should then pass this on to your solicitor who will, with your approval, confirm to the vendor’s solicitor that the finance condition has been met!
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