Step 2 – Finance
Set your limit
Set your limit on the maximum you can pay for your home.
The variables that determine the maximum you can afford to bid or pay on your home are –
- how much you can borrow
- your savings or equity or cash on deposit that you have
- government fees and transaction costs – refer calculator
- a budget for any renovation costs you intend to spend
How much you can borrow is primarily determined by your income and your current debt and credit card commitments.
Contracts being “subject to finance”
If the Contract of Sale is subject to finance approval, then it is your responsibility to ensure that you make every attempt to obtain finance approval by the specified date. If the finance has not been obtained by this date, you may request an extension to allow further time for approval to be given.
The Contract will also specify the period for when the purchaser must either withdraw from the purchase (as specified in the Contract) or request an extension. If a written request for either an extension or for the Contract to be cancelled, is not provided to the vendor or the vendor’s agent within this time, the Contract of Sale can fall unconditional and you, the Purchaser, will be locked into the Contract.
If the due date for finance falls due, and the Purchaser has not been able to obtain finance approval, you can withdraw from the Contract with a written notice served upon the vendor. The Vendor may also request proof that the Purchaser has made immediate application for the loan, has done everything reasonably required to obtain such loan approval, and has a letter from the bank or lending institution declining the loan.
Should you also be providing some of your own funds at settlement, it is your responsibility to ensure that those are available for the settlement date.
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