The difference between conditional and unconditional loan approval is very important to understand when purchasing property to ensure a smoother process and avoid financial complications.
A conditional approval means that your loan has been assessed and approved subject to a few outstanding terms and conditions that should be fulfilled before issuing the unconditional approval. This can include evidence of assets, liabilities, updated pay slips or bank statements, employment verification, valuations, a fully signed and dated contract of sale or any further information asked by the lender. The lender has no obligation towards you at this point to fund your application.
An unconditional approval is usually the second part of the process where a bank formally looks at all the paperwork involved along with a signed loan application to make a decision to formally grant the finance based on that particular property. There are no outstanding conditions listed at this stage. Your loan application gets fully approved without being subject to any terms and conditions. At this point, your loans offer documents are generally distributed.
There is criteria to be met and particular documents to be provided when first applying to a financial lender prior to commencing your research. This allows you to be aware of the price range that is affordable.
In the conditional approval, the financial lender will provide you with the limit they are prepared to lend you to purchase a property after the application has been processed. Before unconditional approval is provided, there are terms and conditions that must be satisfied imposed by the financial lender. It is then time to commence searching for the right property to purchase once this has been provided in writing.
After having researched to find the appropriate property you can then make an offer to buy the property. The lender will verify all of the information provided initially to ensure the information is accurate. To ensure a reasonable price is being paid for the property the lender may require a valuation on the property as well.
After the completion of the valuation and after all the criteria has been met up to the satisfaction of the financial lender, unconditional approval is then provided. A copy should be provided to your Licensed Conveyancer once unconditional approval has been provided. This is because the lender will require certain documentation from the Licensed Conveyancer such a copy of the “Transfer” and the “Contract For Sale of Land”.
To ensure the purchaser will have the finance to complete the transaction it is important to wait until unconditional loan approval has been provided before contracts are exchanged.
Here at Conveyancing Sydney, we aim to ensure that our clients are given the best advice and greatest comfort in obtaining either a conditional or an unconditional approval to help them move forward with confidence to purchase the property they want. Call us now at (02) 8084 2764.