Congratulations!!! Your offer has been accepted and the house of your dreams will become your actual home. That means it's time to have the preliminary sales contract drawn up by the notary appointed by you, the buyer. But what does a preliminary purchase agreement actually entail and what should you pay attention to?
In the five-part blog series "Buying a house" we discuss how to determine what kind of house suits you, what to bear in mind during a viewing, how to bid and negotiate, everything about the preliminary contract, and arranging your mortgage.
Although the name suggests that it is not permanent, the opposite is true.
A preliminary purchase agreement is made by the selling party and the buyer(s) of the property agreeing on topics such as the purchase price, resolutive conditions, and date of transfer. Although the name suggests that it is not permanent, the opposite is true. Therefore, to avoid confusion, today it is referred to as the deed of sale or purchase agreement. When you sign a deed of sale you make a commitment to actually buy the house.
The preliminary sales contract is also called a deed of sale.
From the moment you sign the sales contract, you have three days to reflect. Within these three days, you can still withdraw from the contract without giving any reason.
In the sales contract, you will find all the details about the house you are buying. This ranges from the agreed purchase price to the transfer date, as well as payment arrangements and resolutive conditions. Among other things, you will find the following information in the sales contract:
The latter, the resolutive conditions, are important in the sales contract. Because three days of reflection time are superb, but it's too short to secure financing.
If you break the contract, other than on the basis of resolutive conditions, you owe 10% of the purchase price.
There are usually resolutive conditions included in the contract. These are the unexpected things that would make you want to release yourself from the purchase deed. If you break the contract, other than on the basis of resolutive conditions, you will owe 10% of the purchase price. This amount is paid as a deposit at the notary before signing the purchase deed. The deposit can also be paid with a bank guarantee.
Below we list some of the most common conditions:
The bank processes a mortgage application after the sale deed is signed. Therefore, you may not be able to get the financing, although this risk is small if you are well informed.
In the case of the mortgage application, the mortgagor needs the house's current value in the form of an appraisal report. Therefore, if the bank rejects the financing within the stipulated time frame, the purchase will not go through, without any costs.
Structural renovations can be costly, and the buyer bears these costs. Therefore, an amount is usually included in the resolutive conditions.
If you want to buy an old house or renovate a charming old school building, it is wise to include the building inspection as a resolutive condition. If this inspection reveals hidden defects, the contract will be dissolved.
This is because structural renovations to a building can be costly, and the buyer has to pay for these costs. This can put the buyer in financial difficulties, which is why an amount is usually included in the conditions. Thus, if the cost of repairs exceeds this amount, the sale is rescinded or the price can be renegotiated.
Less common resolutive conditions are:
If you want to buy a house but are still deciding to sell your current home, you can include this as a condition in the sale deed. You have two options: opt for a bridging loan or include a no-risk clause in the deed of sale.
The bridging loan is an extra loan to bridge the period in which you are buying or are planning to buy a new house, but your old house is not yet sold. You also need it if the excess value of your current sold home has yet to be released, and you want to use it to buy your new home. The interest rate on the bridge loan is usually slightly higher than the interest rate on your regular mortgage.
The no-risk clause allows the buyer to sell the current home within an agreed-upon period. If this fails within this period, the buyer can cancel the purchase. The seller would be foolish to wait this period - usually around six months. Therefore, this condition allows the seller to keep the house on the market and sell it.
In particular, the no-risk clause has advantages for the buyer, who is given extra time and thus is not at risk. So the advantage of the no-risk clause for the seller is that it is agreed that the seller may leave the house on the market and even sell it to someone else in the interim.
A National Mortgage Guarantee (NHG) means you are assured of a low-interest rate and against a large residual debt. The NHG also assures your lender that your mortgage debt will be reimbursed. In addition, a mortgage with NHG offers you additional financial security.
If you only want to proceed with the purchase securing your mortgage with NHG, it is a good idea to include this as a resolutive condition in the sale deed.
A deposit is included in the deed of sale. This assures the seller that you will buy the house. The deposit is 10% of the total purchase price. In addition, the deposit protects the seller financially if you cancel the purchase at the last minute.
If you can pay the deposit with your own money, you transfer it to the notary's account. The notary manages the money in a depot. The money is returned to you as soon as the property is transferred.
If you do not meet the obligations in the deed of purchase, the seller can declare you in default. You will then receive a letter informing you that you are in default. You will then be given a period, often eight days, to comply. Keep in mind that this will cost you money, for example, because of extra work by the notary. If you default after the deadline, the penalty clause will take effect. You will then owe a penalty to the seller. This penalty is at least 10% of the purchase price. You pay the penalty for your deposit.
A bank guarantee is often used for the deposit. You use this if you don't have the money for the warranty or don't want to release it for this purpose. For example, you take out a bank guarantee after receiving the binding mortgage offer.
With a bank guarantee, the bank declares that it guarantees payment of the agreed deposit if you, the buyer, do not fulfill your obligations.
The sale deed defines the period in which the bank guarantee must be provided. Usually, the bank guarantee is arranged within two weeks.
Most banks charge 1% for the bank guarantee. For a purchase price of € 350,000, the amount the bank guarantees is € 35,000. You then pay € 350 for the costs of the bank guarantee.
If you have sufficient financial reserves, we advise you to use them. Your Walter Expert with our Buying Service can also help you with this. In most cases, the bank guarantee is higher than the interest you lose if you pay the deposit with your own money.
Last check. The notary will run both parties through the contract to ensure all agreements are properly stated in the sale deed. Everything in order? Time to put your signature on that beautiful deed of sale.
The end is in sight! You have found your dream home and the sales contract has been signed. Now it's time to start financing. How to do that, you will read in the next blog.
Bij het kopen van een huis gaat het niet alleen om het vinden van de perfecte woning, maar ook om het navigeren door het complexe aankoopproces. Gelukkig is er Walter, jouw betrouwbare digitale aankoopmakelaar die je helpt bij elke stap die je moet nemen.
Vroeger, toen de melkflessen nog van glas waren, ging je met een stapel papier onder de arm naar de hypotheekadviseur. Dit kan nog steeds, maar je kunt soms ook zelf een hypotheek afsluiten. En dat is makkelijker dan je denkt. Mits je goed bent voorbereid.