If you are a first home buyer, or simply buying another home, or are an investment property purchaser, really understanding what going ‘unconditional’ means is important.
The process of going ‘unconditional’ on a property is an important step in your journey of home ownership or property investment purchase.
Ensuring you understand the property buying process in relation to going ‘unconditional’ and what you need to prepare for before you put yourself in the position, is crucial to a successful purchase.
What Going ‘Unconditional’ Means
When you make an offer on a property, it is often conditional on factors such as securing finance, receiving a satisfactory building inspection report, or selling your current home.
Once these conditions are met, within the specified time frames, your offer goes from being ‘conditional’ to ‘unconditional’ and the deal is now binding.
It’s at this point where you, as the buyer, commit to moving forward with the purchase and the vendor commits to selling the property.
Once the agreement goes ‘unconditional’, backing out typically involves significant financial repercussions.
Therefore, to safeguard yourself, you need to make sure at the outset of making an offer to purchase a property, that you are fully informed that the condition(s) can be met within the specified time frame and which is often suggested by either the real estate agent, vendor, or yourself as purchaser.
How to Be Financially Prepared For Going Unconditional
Once you have ticked off all the conditions and officially gone ‘unconditional’, you are locked into completing the sale and then it’s time to pay the deposit. You’ll need to make sure that the necessary funds are available to avoid any delays. If you’re eligible to access your KiwiSaver for the deposit, you will need to reach out to your KiwiSaver provider early in the process, as it can take up to 20 working days for those funds to come through. Your Mortgage Adviser and Solicitor will be able to help you with this.
The deposit you pay upon going ‘unconditional’, is the amount you agreed to on the sale and purchase agreement. Normally it’s 10% of the purchase price, but in some cases you can negotiate less.
It’s important to note this needs to be negotiated before you sign the contract, as you can’t change
it after the fact. Whatever the amount is, you will need to have it available to transfer to the real estate agent’s trust account upon going ‘unconditional’.
The balance of the purchase price will be taken care of on settlement day by your Solicitor.
It’s also a good idea to have money set aside for all those extra costs that pop up, like solicitor’s fees, registered valuations and builders’ reports.
These can mount up if you have made a few offers on properties and missed out. These costs still need to be paid, regardless of whether you end up getting the property or not. If you qualify for a cash contribution from your mortgage provider, remember these funds won’t be available until after settlement, so you will need to foot the bill in the meantime.
The Importance of Having Your Finance Pre-Approved Before Making an Offer
If you need to borrow money to buy a property, then it’s always best to get pre-approved
BEFORE you start house shopping.
The main reasons are:
1. You know exactly how much you have to spend, so you don’t waste your time on out of reach properties
2. When it is time to make an offer on a property you normally need to move fast, so, by having the bulk of the approval process out of the way, all you need to do is finalise your remaining loan conditions with your Mortgage Adviser, who will also check that the bank is happy to lend against the property you intend to purchase.
This can make the process of going unconditional smooth and stress free, as opposed to rushing to get it all done in a 10 to15 day timeframe, which can be hectic for all involved!
In the end, getting your head around the process, dealing with any bumps in the road, and making sure your money matters are in order to enable you to go ‘unconditional’, is really important when you’re looking to buy property. Making your offer unconditional is a big deal, because it means you’re all in – you’re legally committed to buying the property.
By being well-prepared, doing your homework, and getting advice from a trusted Mortgage Adviser, you’ll be able to handle this step with confidence. So, feel free to reach out if you need a hand, or just a chat about this, pick up the phone and call 0800 LENDER (536337) or email to [email protected]
