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House Tips – Subject to Financing – Yours or Theirs, or Both?

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Subject to Financing

This sounds relatively easy to understand, but whose financing, how much, at what rate, for what monthly payment and for how long?

For example: Is it subject to your financing, the builder obtaining financing or both? Is it interim financing or is it long term financing? In the USA it is common for the mortgage to run for the length of the amortization period (ie: 25 or 30 years). In Canada, while the amortization may be for 25 or 30 years, the term may only be for 6 months, 1 year, 3 years, 5 years or 7 and rarely 10 years before having to be renewed at the then current interest rate.

If interest rates are rising and you are in the process of getting your financing and the builder is in the process of obtaining their construction financing, you may want to ensure that your subject to financing condition clearly sets out the maximum interest rate you are willing to pay and the term you desire or require.

Are you even aware that the builder may have put a “subject to suitable financing” clause in for their own behalf AND MAY NOT HAVE PUT IN A CONDITION REMOVAL DATE. This means that if for some reason they don’t wish to complete the deal, even if you are qualified – they have an out, unless their condition has been removed. Make sure all such conditions have a removal date and that you are aware of it’s SPECIFIC removal date.

 House Tips   Subject to Financing   Yours or Theirs, or Both?

Be clear. If you are not sure, FIND OUT!