When you’re buying a home or investing in property, there’s a key moment in the process called “going unconditional.” It’s a big step that shows you’re fully committed to the purchase, but it also means you need to be financially prepared.
Whether you’re a first home buyer, buying your next home, or investing in property, it’s important to understand what going unconditional means.
What part of the process do you become “unconditional”?
When you make an offer on a property, it’s usually “conditional.” This means the deal depends on certain things happening, like getting your mortgage approved, passing a building inspection, or selling your current home.
Once all these conditions are met within the agreed timeframe, your offer becomes “unconditional.” At this point, the deal is binding—you are committed to buying the property, and the seller is committed to selling it to you. Backing out after this stage can be costly, so you need to be sure before going unconditional.
Making sure you are financially ready to go unconditional
Once you’ve met all the conditions and gone unconditional, you’re locked into completing the purchase.
The deposit
First up, it’s time to pay the deposit. The deposit amount is a percentage of the purchase price which has been negotiated with the seller and is included in the sale and purchase agreement.
You’ll need to have the funds ready to avoid any delays. If you’re using your KiwiSaver for the deposit, contact your KiwiSaver Adviser or provider early, in case there is a delay in accessing those funds. Your Mortgage Adviser and solicitor can also help with this process.
The deposit is transferred to the real estate agent’s or solicitor’s trust account when you go unconditional. Your solicitor will handle the rest of the payment on settlement day.
Other expenses
It’s also wise to have extra money set aside for additional costs like solicitor’s fees, valuations, and building reports. These costs can add up, especially if you’ve made multiple offers on properties. Even if you don’t end up buying the property, these expenses still need to be covered. If you qualify for a cash contribution from your mortgage provider, remember that these funds won’t be available until after settlement, so you’ll need to cover the costs upfront.
Insurances
It’s necessary to make sure the property you are putting an offer on, can be insured before you go unconditional.
Life Insurance, Income Protection or Trauma Cover is something our Advisers also recommend you have in place to protect you and your family if anything should happen. This is important even before you settle because, like we said earlier, once the property becomes unconditional you are legally bound to the agreement.
Cole Murray has Domestic Insurance and Life & Health Insurance Advisers that can help you get the right insurance for you and your situation.
Why it’s important to have a pre-approval before making an offer
Being pre-approved, before you start house hunting, makes the process of going unconditional smoother and less stressful (especially for first home buyers), rather than to trying to get everything done in a short window.
Know your budget: Pre-approval tells you exactly how much you can spend, so you don’t waste time looking at properties out of your price range.
Have all your ducks in a row: When you find a property you like, you’ll often need to act fast. With pre-approval, most of the work is already done. During the pre-approval stage you will have shown the bank you can meet their servicing criteria. If the bank is satisfied, potentially all they will need to check now, is if the property you wish to purchase is acceptable.
Cole Murray can help
Understanding the process of going unconditional and being financially prepared is essential when buying property. Getting your offer to unconditional is a significant step because it means you’re fully committed to purchasing the property.
By doing your homework, staying prepared, and seeking advice from a trusted Mortgage Adviser, you can approach this stage with confidence.
If you need help, don’t hesitate to reach out! We have a team of qualified Mortgage Advisers and Insurance Advisers who would love to be by your side on your property buying journey.
Photo by Alena Darmel.
