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As a layman, you’ve likely read through clause three in the standard REIQ contract used in transfers and realize that your finance pre-approval meets its terms. In reality, though, this couldn’t be less true. To avoid delays or hold-ups during the transfer process, make sure your financing is in proper order.
Section III and Finance Approvals –
The third section of the standard REIQ contract that is used to express finance approval concerns. In order to meet the terms of the contract — and to proceed with the transaction — a buyer must be approved for financing. Unfortunately, many potential home buyers think that conditional finance approvals are sufficient; they are not. Under the terms of section three, you must have clear, unconditional approval for the financing.
When shopping for a new home, many potential home buyers are pre-approved by banks and lending institutions. While this can give you a good idea of how much you can afford, and is generally a smart way to proceed, it’s not exactly the same as getting approved for financing. This is an initial way to get a feel for what you qualify for with a home loan.
The problem that often occurs is that potential home buyers obtain pre-approval from the bank or lending institution and start shopping for a new home. Upon finding one, they begin the convection process. When confronted with clause three, they inform the seller than they are satisfied due to their pre-approved status. In reality, clause three is not satisfied. At this point, the seller’s real estate agent or other party informs the buyer that they do not meet the conditions of clause three, leaving the buyer feeling completely lost and confused. Of course, buyers who have retained the services of a top-notch conveyancing solicitor need not worry about inadvertently misunderstanding this important clause.
Do not leave in the dark –
To meet the conditions in section three, you will need to be approved for financing to purchase the home in question. This distinction may seem simple, but it is also critically important. Failure to understand the terms of this section may stall the conveyance process and take longer than it should. Meanwhile, the home you want can 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.
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