Did you sign an arras contract and the bank is not granting your mortgage? This situation creates a lot of uncertainty for buyers. The good news is that there are concrete steps you can take and, above all, mistakes you can avoid before signing. In this article we explain what to review, what to negotiate and what to check so you can buy a home with more confidence.
What happens if I sign an arras contract and the bank doesn’t give me the mortgage?
If you sign an arras contract and the bank later refuses the financing, the first thing to do is not to act blindly. What happens next depends largely on what the contract you signed says. That is why, before making any decision, it is worth analysing it in detail.
First step: review the arras contract
The first thing to do is to look at the arras contract. The reason is simple: if the buyer was not sure the financing would be granted, the contract should have been made conditional on the mortgage. If that was not done, the situation can be more complicated, which is why it is so important to get advice before signing.
Arras contracts conditional on a mortgage: what they are and why to negotiate them
Making the arras contract conditional on the mortgage means agreeing that the sale depends on the buyer being granted the financing. This is very common and is negotiated in property sales.
Keep in mind that the seller may or may not accept it. So, if you are not certain the bank will give you the mortgage, you should raise this clause and negotiate it before signing.
The valuation: key before signing the arras contract
Another very important point is the property valuation. Before signing any arras contract or similar document, you need to check that the valuation will reflect the value at which the property is going to be bought. Anticipating this helps you avoid surprises when the financing is being arranged.
Property sale lawyer in Costa del Sol
Having a lawyer specialised in property sales allows you to have the arras contract reviewed, assess whether it should be made conditional on the mortgage, and prepare the negotiation with the seller before committing. At Toscanolex we advise you so that you can make informed decisions in your purchase.
Before signing, take your time
Signing in a hurry is the easiest way to overlook important clauses. Take the time to review the contract, tell the seller what you need and check the key points, such as the financing and the valuation, before committing.
If you are going to buy a home in Fuengirola or on the Costa del Sol, the best time to ask for advice is before signing any kind of contract. You can visit our website to see how we work: Website: www.toscanolex.es
You can also follow us on social media for more useful content about property purchases: Instagram: www.instagram.com/toscanolex
Summary of the essentials
- Always review the arras contract.
- If you are not sure you will get the mortgage, negotiate for the arras contract to be conditional on the financing.
- Check that the valuation supports the value at which you are buying.
- Ask for advice before signing, not after.
Frequently asked questions about the arras contract and the mortgage
What should I do first if the bank refuses my mortgage after I sign the arras contract?
The first thing is to review the arras contract, because what happens will depend on what was agreed in it.
Can an arras contract be made conditional on obtaining a mortgage?
Yes. It is very common and is negotiated. The seller may or may not accept it, so it is worth raising before signing if you are not certain you will get the financing.
Why is the valuation important before signing the arras contract?
Because you need to check that the valuation will give the value at which the property is going to be bought. It is best to verify this before signing any arras contract or other document.
Do I lose the arras deposit if I am not granted the mortgage?
It depends on what your contract establishes, which is why reviewing it is essential. Without analysing the specific document, no general answer can be given.
When should I ask for advice on a property purchase?
Before signing any kind of contract.
Contact
Phone: +34 951 20 45 95
Email: info@toscanolex.es
Website: www.toscanolex.es
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