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Conditional Loan Letter with Unconditional Contracts

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  • 30-01-2018 3:54pm
    #1
    cd_44
    Registered Users Posts: 3 ✭


    Hi everyone,

    Today I went to sign my contract with my solicitor for the house I am gonna purchase. And my solicitor told me that the contract is unconditional, saying that even if anything happened on my mortgage before draw down, I will still lose my 10% deposit.

    So I have my formal loan letter, but it's still with special conditions such as insurance, income etc. Thus there is still a little bit of a chance that the bank decline the mortagage before draw down for whatever reason (Of course i know the chance is very low). Thus to me, this is a conditional loan letter.

    So my question here is, I noticed that there is a special condition in the contract inserted here, which looks like my contract subject to loan approval :

    "If the loan approval is conditional on a survey satisfactory to the lending institution or a mortgage protection or a life insurance policy being taken out or the lending institution being satisfied at any time prior to drawdown of the loan that its valuation of the property has not changed since the date of loan approval or some other condition, compliance with which is not within the control of the purchaser, the loan shall not be deemed to be approved until the purchaser is in a position to accept and draw down the loan on terms which are within his reasonable power or procurement."

    BUT, i asked my solicitor about this clause and he said this clause doest not guarantee anything if I couldn't get my mortgage and if I couldn't get the mortgage i still have high chance of losing my deposit.

    This makes me very worrying and i am quite uncomfortable to sign an unconditional contract based on a conditional loan letter, especially with the chance of losing my deposit. What do you guys think about this? Thanks in advance.


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    #2
    Ronaldinho
    Registered Users Posts: 829 ✭✭✭Ronaldinho


    cd_44 wrote: »
    Hi everyone,

    Today I went to sign my contract today with my solicitor for the house I am gonna purchase. And my solicitor told me that the contract is unconditional, saying that even if anything happened on my mortgage before draw down, I will still lose my 10% deposit.

    So I have my formal loan letter, but it's still with special conditions such as insurance, income etc. Thus there is still a little bit of a chance that the bank decline the mortagage before draw down for whatever reason (Of course i know the chance is very low). Thus to me, this is a conditional loan letter.

    So my question here is, I noticed that there is a special condition in the contract inserted here, which looks like my contract subject to loan approval :

    "If the loan approval is conditional on a survey satisfactory to the lending institution or a mortgage protection or a life insurance policy being taken out or the lending institution being satisfied at any time prior to drawdown of the loan that its valuation of the property has not changed since the date of loan approval or some other condition, compliance with which is not within the control of the purchaser, the loan shall not be deemed to be approved until the purchaser is in a position to accept and draw down the loan on terms which are within his reasonable power or procurement."

    BUT, i asked my solicitor about this clause and he said this clause doest not guarantee anything if I couldn't get my mortgage and if I couldn't get the mortgage i still have high chance of losing my deposit.

    This makes me very worrying and i am quite uncomfortable to sign an unconditional contract based on a conditional loan letter, especially with the chance of losing my deposit. What do you guys think about this? Thanks in advance.

    Are you sure you posted the entire clause? It looks very similar to what I signed on a place just a few weeks ago but there was more to mine than is posted above.


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    #3
    cd_44
    Registered Users Posts: 3 ✭cd_44


    Ronaldinho wrote: »
    Are you sure you posted the entire clause? It looks very similar to what I signed on a place just a few weeks ago but there was more to mine than is posted above.


    Hi. yes this is the entire clause, would u mind pm me your cluase? Thanks in advance!


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    #4
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Ask the solicitor to agree a loan clause with the vendor.


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    #5
    myshirt
    Registered Users Posts: 5,245 ✭✭✭myshirt


    Samuel T. Cogley wrote: »
    Ask the solicitor to agree a loan clause with the vendor.

    Probably a new build. Vendor will just move on.


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    #6
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    myshirt wrote: »
    Probably a new build. Vendor will just move on.

    Has to just risk it then so.


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    #7
    cd_44
    Registered Users Posts: 3 ✭cd_44


    myshirt wrote: »
    Probably a new build. Vendor will just move on.

    No, it's second hand. And I am actually quite surprised that my solicitor asked me to sign an unconditional contract.


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    #8
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    cd_44 wrote: »
    valuation of the property has not changed since the date of loan approval or some other condition, compliance with which is not within the control of the purchaser, the loan shall not be deemed to be approved until the purchaser is in a position to accept and draw down the loan on terms which are within his reasonable power or procurement
    To me this reads as "if the banks surveyor finds the fcukup that you missed, we're going to assume you aren't getting your loan", and thus they get to keep it.

    I wonder how many times someone couldn't buy the house?


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