We usually arrange a mortgage only when we have found a property to buy. However, there are times when we need to arrange a mortgage before we choose a property. But then we need to keep an eye on the deadline by which we need to get the property to avoid the penalty for not taking out the mortgage.
What are the conditions for taking out a mortgage?
Drawdown of the mortgage loan is cashless, in the case of a non-purpose loan by transferring money to the account requested by the client. In the case of earmarked drawdown, supplier invoices, etc. are paid.
You can usually draw down your mortgage within two days of meeting the drawdown conditions, either in one lump sum or in stages, depending on the loan agreement. The conditions to be fulfilled include the conclusion of a purchase contract, insurance of the property and vindication in favour of the bank, a proposal for the entry of a lien at the land registry, proof of payment of part of the price from own resources and usually the establishment of a current account with the mortgage provider. You then usually have 12 months to draw down the mortgage.
Mortgage default is a problem
It is no exception that you have applied for a mortgage loan, the bank has approved it and the seller suddenly decides not to sign the purchase contract.
A similar situation can arise if you take out an upside-down mortgage and don’t find the right property within the agreed period. Apart from the fact that you have not become the owner of the property this has another hitch. You will have to pay a penalty of up to 5% of the unused amount for not taking out the mortgage.
Did you know that mortgage penalties include not only the penalty for not taking out the mortgage, but also the penalty for paying off the mortgage early and the penalty for not taking out the mortgage?