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Conditional or unconditional….what does it all mean?

It’s one of the biggest purchases of your life and the real estate agent asks you to sign on the dotted line. The pressure is on! With pen in hand the little voices in your head are questioning….Can I afford it?….Should I get a building and pest inspection?…..Maybe I should get my lawyer/conveyancer to check the contract of sale? If you haven’t done these things previous to making a final offer it’s time to do them before pen goes to paper.

When making an offer on a property it’s not unusual to make it subject to various conditions. This is only plausible when purchasing through private treaty rather than auction. Therefore, when you purchase a property at auction make sure your finance is organised and any building inspections or other requirements are satisfied before you bid as the purchase is unconditional and there is no cooling-off period.

When purchasing a property there are a number of considerations; you may want to include some of these in your conditional offer:

Conditional offers may be subject to –

  • Finance approval
  • Building and pest inspection showing no major problems
  • The sale of another property
  • Bank valuation needs to match the purchase price
  • Confirmation of council approval for build (eg. this may be a renovation or granny flat)

Adding these conditions to the contract will give you peace of mind as well as a safety net if something does go wrong. Buyers and sellers need to work together for a final outcome and there are times that an unconditional offer may be more appealing to the seller as it’s chance of falling through is less likely.

Furthermore, it’s important to know if your loan is conditionally approved or unconditionally approved.

Certain conditions must be fulfilled before you get your loan ‘unconditionally approved’. The lender may ask for evidence of assets or liabilities, they may ask for proof of income amongst some of the information required. Conditional approvals are subject to given terms and conditions that must be satisfied before an unconditional approval is issued.

A conditional approval is also known as a pre-approval and is generally valid for 30 – 90 days depending upon the lender. It’s important that before you make an offer on a property you understand and are aware in writing the requirements your lender specifies. Once all conditions are met by your lender the application will be unconditionally approved and no other conditions need to be satisfied.

Buying a property requires a considerable amount of planning and research and agreements should not be entered into lightly. It’s important to communicate effectively with everyone involved to achieve the best outcome. Should you have any questions about purchasing a property please contact our mortgage brokers.

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