Credit and property are two parts of one transaction
The sale agreement and financing remain legally distinct, but economically they are closely connected. The lender evaluates both the borrower and the asset over which security will be created.
Purchase price and valuation
The agreed purchase price does not necessarily coincide with the lender’s valuation. A lower valuation may affect the amount of finance available and the buyer’s required equity contribution.
The mortgage and creditor priority
A mortgage is a real security interest. Its practical importance emerges in enforcement, where the secured creditor may pursue the property and receive priority according to ranking.
Due diligence of the asset
Legal and technical defects may affect marketability, usability and value, and therefore also the bankability of the transaction. A lender’s checks do not replace the purchaser’s own due diligence.
Structuring the transaction
Timing of transfer, mortgage registration, drawdown, conditions precedent and documentary requirements should be coordinated to prevent gaps between acquisition of title and effectiveness of security.