A recent article in the Sydney Morning Herald discussed a bank’s recent practice of ‘blacklisting’ certain buildings on which they refuse to lend finance. This means that whilst you have a pre-approval to borrow a specific amount, the bank may later not agree to lend you any money if your ‘perfect place’ happens to be on their blacklist. There are several reasons why a property might end up on a bank’s blacklist, which may change from time to time.
This highlights the importance to ensure that you seek legal advice on your Contract before you sign and have the agent exchange the Contracts to ensure that the appropriate conditions are added to the Contract and so that you have time to obtain an unconditional loan approval from your bank to be certain that you will have the money to complete your intended purchase.
If you are worried about missing out on the property, at worst, you should ensure that when the real estate agent exchanges the contract that you have not waived any cooling off period. This will ensure that you have time to confirm with the bank that they will lend you the money you require to purchase the property. If you are purchasing a property at auction, it is important that you are aware that there is no cooling off period therefore, unless you have previously obtained legal advice and negotiated with the Vendor for the Contract to be ‘subject to finance’, you will be bound to purchase the property whether or not the bank lends you the money.
Spending the time upfront could save you tens of thousands of dollars in lost deposits if you fail to complete a purchase because a bank refuses to lend you the money.
If you would like to discuss your proposed purchase, please contact us.
