Hi
Please excuse my ignorance when it comes to this question, but:
If you get Pre-Approved finance does that mean you can make a Cash Offer? Or is the finance approval still subject to the bank valuing the property etc?
One half of me thinks that if you have finance approved you get to go shopping up to that limit, the other half still thinks there may be a catch. I just don't want to get caught in a contract that I can't get out of because pre-approved finance doesn't actually guarantee you the cash.
Or perhaps I should add one condition in that would still allow an out (but still have a cash offer)?
Thoughts?
There is a catch – all pre-approvals will be subject to valuations and most to the bank verifying all information supplied.
But having a per-approval and showing the vendor will help them take your seriously and may even help you negotiate a discount.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
as Terry stated, pre-apps will always be subject to valuation, LMI acceptance (if required) and any other conditions the lender places on the application and requires before formal approval. A pre-app says you can afford 'x' loan amount based on info provided but does not guarantee you have finance until all conditions are met.
Use a 'get out clause' always as you never know why you might need it and also "yes" the valuation can come in as not good enough security to use against the loan after the valuation and or if the property is old and is regarded as "high risk".
I am currently tied up in an interesting deal where i was given pre-approval everything went fine until the valuation and the bank won't lend the money unless i have security in the form of an IP. So I'm rushing around to get a money partner to try save the deal and or get this current property completed to use as security.
I know there is 40k profit in the deal easily after i renovate it plus it will be positive cash flow.
Thanks for all your comments. It all makes sense.
I was just hoping to be able to use 'Cash Offer' so I could negotiate a bit better.
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