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16 Nov



Posted by: Derek Vandall

One of the greatest milestones in the process of purchasing a home is when your offer to purchase is accepted! Unfortunately, that moment is quickly followed by stress – securing financing. 99% of the time a realtor will ask you if you have been pre-approved by a bank or a mortgage broker before they write an offer on your behalf. Regardless, your realtor and your mortgage broker should advise that you need to have a subject to financing condition in your offer.

In order for someone to receive a mortgage from a lender, they need to meet the lender’s (and sometimes the insurer’s) conditions. Usually, these all revolve around a borrower’s nature of employment, income, down payment, as well as the property itself. It is important to know that if your offer to purchase a specific home is accepted, the lender may still decline your mortgage if they don’t like the property regardless of your pre-approval. For example, the lender may like your employment, income, and down payment but if they don’t like the property because the condo board doesn’t have enough money in their contingency fund to fix the leaking roof in the next 12 months, they could turn down your application leaving you high and dry.

If you don’t have the money, you don’t get the home. That is why you should have a condition for financing in your offer. This way, if suddenly you can’t meet the lender’s requirements, you can still cancel your offer without any hassle or loss of deposit.

What happens if you make an offer without a condition for financing? Once this type of offer is accepted, that house is now legally yours. This means that the deposit is no longer yours and you have to come up with the remaining amount owing on the purchase price. If you cannot do so and are unable to complete the purchase, the seller will keep your deposit and may file a lawsuit against you for damages as they have now taken their home off the market. Taking the home off the market means potentially losing out on the ability to sell their home to someone else while they waited for you to get financing.

Always, always, always have a condition in your offer that states ‘subject to financing’ within at least 3 to 5 business days. If you go in without that fail-safe and it turns out you really need it, you may find yourself where nobody really wants to be – in the middle of a lawsuit. ‘Subject to financing’ is a must! If you have any questions, contact a Dominion Lending Centres mortgage professional.


Dominion Lending Centres – Accredited Mortgage Professional