It can take a long time to find a house you like in an area you like that is also within your budget. Once you find one, you may be keen to sign on the line and make it yours before someone else makes it theirs.
Before you proceed, it is important to double-check whether you can afford it or not. Your situation may have changed since you began your search, or interest rates may have risen making something once affordable no longer so.
You cannot be sure what will happen next
If you are sure you can still afford it, you should put a contingency clause in place just in case something beyond your control changes in the coming weeks. If something were to occur that makes the property unaffordable for you, the clause would allow you to back out without penalty (provided it is properly written).
Here are examples of what might go wrong:
- The lender changes their mind: Preliminary offers from lenders do not always translate to a loan on those terms. They retain the right to change their offer or withdraw it altogether at this pre-agreement stage.
- You lose your job: Losing your job is always a possibility, no matter how long you have been with a company or how valued you feel. As your mortgage will be based on your income, a job loss or drop in wages could cause the lender to withdraw their offer or cause you to rethink.
- Your buyer drops out: If you have a house to sell you likely need a buyer lined up for it before signing to buy a new place. Just like you, they could have to withdraw for a multitude of reasons – and that could affect your ability to buy.
Obtaining legal guidance before signing any paperwork is essential to protect yourself when looking to buy a home.