1. What is a financing condition, and why is it important?
If your bid on a house has been accepted, you then draw up the purchase contract together with the seller. Featured within that contract are a number of conditions applicable for the sale, such as the purchase price and date of completion. The contract also contains so-called resolutive conditions. The financing condition (also called the financial clause) may be one of them. This allows you as a buyer between 4-6 weeks to secure the financing for the property. If you fail to secure financing for your property, then you will be able to cancel the property purchase free of charge.
Good to know: in order to implement your financial clause, you’ll usually have to be able to prove that you were not able to secure a mortgage from a lender. This can be proven through 1 or 2 official rejections, depending on the conditions stated in the property purchase contract. In addition, you will have probably already incurred costs prior to your rejection, such as a valuation report, building survey, or costs for mortgage advice. You will not be reimbursed for those costs.
When is the financing condition important?
The moment you make an offer on a property, you will not yet have certainty about the financing aspect. Sometimes, you will not be able to secure the mortgage you’d like, such as in the following examples:
- If the lender feels that your income is too low to cover the costs. Calculate what your maximum borrowing figure is.
- If the lender refuses the property as collateral for a loan.
- In the event of unexpected changes in personal circumstances, such as dismissal or becoming incapacitated for work.
- If you have certain credits that you had not taken into account. Tip: check your credit rating on the website of Stichting BKR and DUO. This way, our mortgage advisor can take this into account, and you can prevent any nasty surprises.
The legal cooling-off period is 3 days; oftentimes this is too short to have already gained enough clarity for these kinds of reasons. This is precisely why mortgage advice is so important, especially if you want to put in an offer on a property without financing conditions. Feel free to contact us, we’ll be more than happy to help you.
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