10 Mistakes When Purchasing a Property Which Can Be Avoided - Part 7 - Working With Your Lender

 10 MISTAKES WHEN PURCHASING A PROPERTY WHICH CAN BE AVOIDED

Part 7 – Working with your lender

Sydney-based legal practice Checkbox Legal will assist you to avoid or minimise complications which arise when purchasing real estate. We helped many of our clients to avoid multiple pitfalls in the process and now ready to share our knowledge with you.

WORKING WITH YOUR LENDER

In our previous publication we discussed why is it necessary to obtain various property certificates and how would the final purchase price be adjusted.

If you have been working proactively with your mortgage broker or your lender directly, some 1-2 weeks before the settlement date the lender will contact your conveyancer by a fax or an email message and will provide a letter which would contain an amount of funds which you borrowed from that lender and which are available for a purchase of your property.

This is the end result of your involvement in borrowing process which would enable us to instruct the lender to provide funds for settlement.

To get to that end however you hopefully worked with your mortgage broker or your lender directly in advance, read their Product Disclosure Statement (PDS), asked questions, obtain answered and hopefully received an independent financial and/or legal advice on your loan.

The lender has probably conducted a valuation of the property you are purchasing for loan to value considerations.

The lender by then has already contacted us to request some documents which are required for your loan application, such as a copy of your contract and transfer, and we provided them.

What can possibly go wrong? You need to make sure that you know well in advance how much of available funds your lender can provide to you, that is funds net of fees, charges, stamp duty on mortgage (if any) etc.

If you are short on funds, you need to have saved enough already to cover the shortfall, otherwise you may need to ask the vendor to delay the settlement and often face up to 10% p.a. penalty interest daily until that date when you are in the money and ready to settle.

Conclusion: sit down with your mortgage broker and discuss how much you can borrow, what savings do you have and remember that final purchase price may be adjusted up for several hundred to several thousand dollars. Do not end up in default of the contract because you miscalculated your budget.

As always, we remind that we at Checkbox Legal provide not only residential and commercial conveyancing services, but also act for our clients in a variety of other legal matters - check out our website for details.

Contact Checkbox Legal on our phone number 0410 64 54 53 or sent us an email.

Regards

Andre Petrov - Checkbox Legal.