Key Insights You Need Before Making a 'Subject to Finance' Offer

Are you uncertain about securing a home loan, but you have found a house you absolutely love? Making an offer 'subject to finance' might be your best bet. Here’s what you need to know.

Imagine this: You've discovered your dream home and don't want to risk losing it to another buyer. So, you sign the contract and put down a deposit, but securing the mortgage isn't guaranteed. This is a nightmare scenario for many home buyers, as failing to get loan approval could mean losing your deposit.

One potential solution is to include a 'subject to finance' clause in your offer.

The Basics of a 'Subject to Finance' Offer

Adding a 'subject to finance' clause to the sale contract means that the buyer has the option to withdraw from the sale without forfeiting the deposit if they cannot secure mortgage financing within a specified timeframe. Sellers, however, won’t wait indefinitely, and the period to secure loan approval is often quite short, sometimes just a few days.

This clause can alleviate the stress of a last-minute scramble for financing, which might otherwise force you into accepting an unsuitable loan.

Potential Drawbacks

There are downsides to consider. Sellers are not obligated to accept offers with a 'subject to finance' clause. In a hot property market, where homes can sell in as little as 10 days, according to the CoreLogic Report, sellers may be less inclined to agree to such conditions. Additionally, if you're purchasing at an auction, sales are typically unconditional, leaving no room to alter the contract.

Given these challenges, consulting with Osinski Finance before house hunting can be incredibly beneficial. Pre-approval of your loan, for instance, can significantly reduce the uncertainty regarding finance.

Should You Buy Before Selling?

A common dilemma when considering a move up the property ladder is whether to sell your current home before buying a new one. The proceeds from your home sale can reduce the need for a 'subject to finance' offer.

However, if you find a new home before selling your current one, a bridging loan might be a solution. This type of loan covers the financial gap between the purchase of your new home and the sale of your old one. Typically, bridging loans require only interest payments rather than principal and interest, but they often come with higher interest rates compared to standard home loans.

Reach Out to Us

Buying a new home involves meticulous planning. Thus, having professional assistance is to your advantage. Contact us today to simplify your purchasing process. Whether you need help navigating 'subject to finance' offers or understanding bridging loans, Osinski Finance can help make your upgrade significantly less stressful by clarifying your options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.