Making an offer to purchase a property without a financing condition can be risky because it means you are committing to purchasing the property even if you are unable to secure the necessary financing. Here are some potential risks to consider:
- Inability to secure financing: If you are unable to secure financing for the property, you will still be obligated to purchase it, which could result in you losing your deposit and potentially being sued for breach of contract.
- Legal action: If you cannot complete the purchase and do not have a financing condition in your offer, the seller may take legal action against you to recover any losses they incur as a result of the failed transaction.
- Higher interest rates: If you are unable to secure financing from a traditional lender, you may need to seek alternative financing options that come with higher interest rates and less favorable terms.
- Limited funds: Without a financing condition, you may be required to put a larger deposit down on the property, which could limit the amount of money you have available for other expenses related to the purchase.
- Difficulty getting out of the contract: Once you have signed a contract to purchase a property without a financing condition, it can be difficult to get out of the contract without incurring financial penalties.
- Uncertainty about the property’s value: Without a financing condition, you may not have the opportunity to conduct a thorough appraisal or inspection of the property, which could result in you overpaying for a property that is not worth the price you paid.
- Negative impact on credit score: If you apply for multiple mortgages and are declined, it can negatively impact your credit score, which can make it harder for you to secure financing in the future.
In summary, not having a financing condition in your purchase offer can be risky and potentially costly. It’s always a good idea to work with a mortgage broker to ensure that you have a solid understanding of your financial situation and include a financing condition in your offer to protect yourself from these risks.