Signing purchase contracts - Verbal Mortage Approval

We are thinking of buying an apt, but are worried about losing our deposit if somehow our verbal approval from the bank falls through. Do most people sign with verbal approval from the bank, with final approval following after the purchase agreement is signed?

Hi BigGoose,


Unfortunately you're quite lucky if you even get a verbal commitment from a bank. When I was looking to buy, I found a place I liked and the bank told me to fax them the provisional sale and purchase agreement, after it had been signed, and they would then let me know if I could have a mortgage or not. I pointed out that I needed to know before I signed, because without a mortgage I couldn't buy the flat and would lose my deposit. The woman I was talking to was unable to give my any guarantee, but she was kind enough to say that it would "probably be OK" if I stuck with a property less than 20 years old.


My situation is a bit different though because I don't have a regular salary, I'm on commission only. If you have a regular salary there probably isn't anything to worry about - if your bank should go back on its verbal agreement for some reason, then there's an excellent chance that you can get a mortgage from another bank.


So, to answer your question, yes, most people have to sign with only verbal agreement.

Why don't you add a rider to the sales agreement stating that the agreement is subject to the mortgage approval by the bank. That way, if it fall through you lose nothing.

We got a surprise. We were told that the bank would lend 50 percent. But in the end they would only lend 40 percent. Luckily, we had the difference in cash,


I think a seller might accept that rider (allowing escape), byt they might give you a limited time frame (like 1 week or 10 days), and might want a "drop dead fee" if you fail to proceed. I suppose that fee might be $50,000 to $100,000, but the amount would be up to the seller, not me. Certainly not all sellers would accept that, but it is worth a try.