That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
From Pre-Approval to Property Ownership: Understanding the Unconditional Phase
Navigating the property purchase journey involves critical moments that can make or break your homeownership dreams. The moment your offer goes "unconditional" represents one of the most significant commitments you'll make in the process—yet many buyers remain confused about what this actually means.
We unpack the crucial distinction between going unconditional and settlement day. Think of unconditional status as your engagement—you've made a serious commitment and legally bound yourself to the purchase, but you haven't yet gotten the keys or moved in. This distinction frequently creates confusion among first-time buyers who don't understand why they're celebrating a purchase they can't yet access.
The stakes at this stage couldn't be higher. Once unconditional, backing out means facing potentially severe financial penalties. We share real-world scenarios where circumstances forced buyers to reconsider after going unconditional—resulting in significant financial losses. This isn't meant to frighten you but to emphasize the gravity of this commitment.
Practical considerations abound during this phase. Your deposit payment comes due within 24 hours, requiring careful financial planning. If you're using KiwiSaver funds, timing becomes critical as withdrawals take ten working days to process. Similarly, coordinating the end of rental agreements requires foresight to avoid the financial strain of paying both rent and a mortgage simultaneously. We also emphasize the absolute necessity of conducting final property inspections before going unconditional—sharing cautionary tales of flooded properties and tenant damages that have derailed purchases at the eleventh hour.
Our insider knowledge helps you navigate potential roadblocks, including how to properly request extensions if bank approvals or other requirements are delayed. These insights come from years of helping buyers through exactly the stressful scenarios most guides never mention. Listen now to ensure your journey from pre-approval to property ownership proceeds with confidence rather than confusion. Your dream home awaits, and understanding the unconditional phase is your key to claiming it without costly missteps.
Hello and welcome back to the episode of Conch Cares. Hey, conch, kia, ora, everyone. So, conch, we talked about what happens when people want to buy a house, how they get a pre-approval, how they get a property on the offer in the previous episodes. Now what happens once we tick off everything with the bank? How do we get a person to a position where they can call that house their own?
Speaker 2:Well, once all the conditions are ticked so once you're satisfied with the builder's report, the limb report and all that, and then the bank's happy with everything you give the green light to your lawyer, and then your lawyer will give the green light and go. You give the green light to your lawyer, and then your lawyer will give the green light and go yes, your sales and purchase agreement or your contract is now unconditional.
Speaker 1:So we call that going unconditional, and this is where we normally pop bubbles, but for a lot of clients it still doesn't seem real because they still don't have the keys.
Speaker 2:And.
Speaker 1:I think this is where a lot of them get confused, right, because they're like I don't have the keys to my house, how can I call it my own? But legally, once you've gone unconditional, you have to purchase that property.
Speaker 2:Yes, there's no going back.
Speaker 1:There's no going back In certain cases. There have been cases where people decided not to buy and again because due to, you know, marital problems or whatever happens in their lives, and they have to pay big penalties if they can't settle. So when you go unconditional, it's super duper important to understand that your legal obligations are to settle on the property and we're going to talk about settlement in the other episodes. But the settlement is when you get the key and unconditional is when you commit, commit to that purchase. Yeah, consider it like an engagement. I guess you know when you get like a proposal and you get a ring and a person gets engaged and like, woohoo, I'll get married. So this is your point of going woohoo, popping the bubbles and then planning your wedding, which is planning your settlement day. Yeah, if we put it in that scenario in a way, yep.
Speaker 2:Can be like that, can be like that, yeah. But yeah, going unconditional is pretty much you've set the deal, that's it. You're buying the property. So the excitement, the adrenaline is just through the roof. And then the next thing you have to focus on is the settlement date. So when's your settlement? Generally, you set the settlement date on your sales and purchase agreement as well, and it's normally about 21 days After going unconditional.
Speaker 1:After going unconditional, yeah, but this is something you can negotiate with your lawyer and with the vendors. Some vendors may want it sooner, some may want it later. Yep, all very dependable. Also, before you decide to go unconditional, if you're currently renting, my hint would be check with your contract and check with your landlord, because you don't want to be in a situation where you're paying rent and mortgage at the same time.
Speaker 2:Yeah, for sure. If you can't get out of your contract, Check your notice period for your landlord with your landlord.
Speaker 1:Yeah, absolutely. Whether you're on fixed contract with your landlord or whether it's periodic, different things apply. We did an episode with a rental manager, property manager, and I think she covered when you can give notice and stuff like that. So I would highly recommend going back through that one. But in terms of going unconditional, one thing that people also forget is when you go unconditional, you actually have to pay the deposit.
Speaker 2:Yes, yeah, so the deposit is genuinely required within 24 hours of going unconditional and that is paid to the agent's account. Trust account, trust account yeah, so ensure you've got your deposit ready. I think we covered off in a previous episode in terms of the deposit. If it's only just your KiwiSaver, your solicitor would have negotiated that for you prior to you going unconditional.
Speaker 1:Because it takes 10 working days to get KiwiSaver out. So 10 days prior you should have done your forms for the KiwiSaver withdrawal. The lawyer would have given the undertakings and on the day when you go unconditional, you get the KiwiSaver out to pay down the deposit. Now the only thing sometimes happens is when you can't go unconditional that day and it's a due date you have to confirm by five o'clock, for instance, and you can't. This is the time to ask for extensions. Yes, yeah.
Speaker 2:So it will depend on the vendor and their lawyers on whether they would or will agree to an extension of your conditions or will agree to an extension of your conditions. So again, liaise with your solicitor, who will act on your behalf of the vendor solicitor in regards to extending that contract.
Speaker 1:Yeah, and again, like if you already spend money on valuation on the builder's report and we're just waiting for the bank final tick off and the banks are so busy at the moment it's taking weeks at the moment to get the response.
Speaker 1:So be aware of that as well, that you know sometimes things are outside of our control, outside of the lawyer's control, or the lawyer may be aware you know there might be someone else in their place, there might be all sorts of things happening. So sometimes you may not go unconditional on the day and you may need to require an extension.
Speaker 2:Yeah, like a 24-hour extension or something.
Speaker 1:Yeah, and most of the time, vendors are giving that because they also understand that you've spent all this money, you've got your heart in it. You're not pulling out of the property and look if they don't have any other offer, what else can they do? Yeah, right, unless they really have to sell in that moment, they might pull it off and go with another agent, or they might rent it out, et cetera. So, just be aware, so we're giving you this information that you won't be able to find easily online, because people don't talk about these things. They don't talk about the actual stresses. They talk about oh, it was stressful, but they don't talk about the actual stresses. They talk about oh, it was stressful, but they don't talk about exactly why it was stressful or what happened behind the scenes. So that might be one of the reasons why it may appear stressful, but most of the time, we try to make it less stressful and this is why we do get you pre-approved well ahead of time. Yes, so you can get unconditional in time. Correct, awesome.
Speaker 1:Now, one of the other things that happens when you go unconditional before you go unconditional, we do recommend to go and view the property again. Yes, arrange a property inspection. Yeah, because you want to make sure it's still in the same condition as when you put an offer. Yeah, because things can happen and recently we had a case. It was very unfortunate. Our client signed an agreement, you know.
Speaker 1:The house went on the offer and apparently the house had a flood, so a cylinder burst, flooded the whole property. The vendors agreed to renovate the whole place before he needs to go unconditional, but we realized they won't be able to do it on time and he didn't want to take that risk. So again, you know it wasn't nothing to do with valuation, nothing to do with the lawyers or the finance, although the finance would have been pulled on. That you know the moment we discovered that this happened. But yeah, do double check for those things. We also had instances where people are buying ex-rental properties. So if you're buying a house that you know it's not the people that are living in there, it's actually the rental property. You know the damages can happen when tenants are given notice to leave and they may not be happy about it. So again, double check that you're fully comfortable to go unconditional, because once you've gone unconditional there is usually no way back.
Speaker 2:No, going back, no, turning back, yeah, exactly.
Speaker 1:So hopefully we've covered off everything. You need to know what happens when you need to go unconditional. Stay tuned for the next episode, where we're going to talk about what happens after you've gone unconditional and, before settlement, what things you need to be thinking about for it to happen. Thank you, stay tuned. Bye, thanks.