If you want to buy a house or flat, the seller usually requires a financing confirmation from the lender before signing the contract. This is a confirmation that you can obtain the mortgage required to purchase the property and that you have the necessary financial resources. But how binding is this assurance? And can you go ahead without one? We answer these and other questions here.
A financing confirmation is a written, informal confirmation from the lender that they are prepared to support you in financing the property you want to buy. This gives you and the seller some peace of mind that you can afford the property. As a rule, a financing commitment relates to a specific property.
A financing confirmation is generally not yet a binding commitment to granting a mortgage. The financing is, as a result, not yet secured. Lenders protect themselves against legal claims with formulations such as “We hereby confirm that we are prepared in principle to finance the single-family home XY with a mortgage...” or “Subject to final review, we hereby confirm that...”. They can revoke this commitment at any time if, for example, they have new information about your creditworthiness or the condition or market value of the property you want to acquire.
Practice shows that financing confirmations are drawn up very carefully. And although they aren’t binding, they are generally reliable.
In many cantons, an irrevocable promise to pay from the lender is required instead of a financing confirmation for the final notarization of the purchase contract. An irrevocable promise of payment is the lender’s commitment to transfer the purchase price amount. The lender makes an irrevocable promise to pay once the legally binding mortgage agreement has been signed by the borrower and other conditions have been fulfilled.
The mortgage agreement outlines all the contractual details between you and your lender. By this point, however, your creditworthiness and the property you are financing have already been thoroughly checked.
In order to make a financing commitment, the potential lender will check your creditworthiness and the value of the property. To do so, you will need to provide the following information and documents:
The more information you submit about your financial situation and the property, the more soundly your financing project can be assessed and the more reliable the financing confirmation will be.
Whether or not you need a financing confirmation depends on the seller and you: if they trust you and you are sure that the financing will go smoothly, it is theoretically unnecessary. Nevertheless, it is often necessary when viewing a property these days. A financing confirmation or even an irrevocable promise to pay is required as a minimum standard, at the latest when the purchase is made before the notary. A financing confirmation is often required when the reservation contract is signed.
Few sellers will sign a contract of sale without some form of security. If you are a buyer, you should also obtain a financing commitment, as this will protect you from the worst case scenario: you have signed a purchase agreement but are unable to pay the purchase price because you haven’t found a financing partner yet. As the buyer, you will be responsible for any costs incurred, such as notary fees, without becoming the owner of the property.
PostFinance will be happy to do this for you once your dossier has been through a successful check.
PostFinance won’t charge you any fees for checking your dossier.
Yes. Financing confirmations are usually provided with a validity period.
If your creditworthiness is good, you will get a financing confirmation within a few days.
Our advisors would be pleased to show you your options during a personal meeting. It will be easier to find a suitable property if you know what price range your dream property should be in to ensure it is affordable.
