So you’ve decided on the house you like, you made an offer, and the seller agrees on the price. You then sign an agreement to purchase/offer letter. The offer letter is only binding once the seller has signed. In most cases, it is pretty straightforward if you and the seller are signing the documents at the same time, but there are times you will have to sign it first and then only proceed to the buyer to sign. In any case, the question is, what happens now?
You now have 21 working days to hire a lawyer to draft the Sales and Purchase Agreement and to get your loan application approved.
1. Contact as many mortgage brokers from different banks. Prepare these documents before hand to speed up the process. This can be done through a mortgage specialist or through contacts from your real estate agent. Most buyers would request a paragraph to be included in the offer letter which states that the booking fee will be refunded in the event no banks approve their loan within 7-14 working days (proven with at least 3 bank rejection letters).
2. Contact your lawyer. If you don’t have one, ask for recommendation from friends, family, or from your real estate agent. Get quotations (the rates are usually quite standard) and get them to draft the S&P. Some buyers choose to sign the offer for loan financing before hiring a lawyer, but this is risky as you may risk not meeting the 21 working days deadline. Even if you choose not to engage a lawyer before securing a loan, you should at least decide on which lawyer you want to work with, and contact them as soon as you have signed the offer for financing.
3. Keep in touch with both mortgage broker (from the bank/banks) and your choice of lawyer to ensure you are able to sign the S&P within 21 working days. If you need an extension, get your lawyer to draft an official letter requesting an extension of 7 working days to be signed by both parties (purchaser and seller).