Subject to Finance in Victoria A Complete Consumer Guid

Buying a property in Victoria can feel overwhelming, and the finance clause is one of the most misunderstood parts of the contract. Many buyers think that a subject to finance condition is an easy safety net. In reality, it only protects you if you follow it exactly as written.

Below is a clear, plain English guide for everyday buyers so you know what to do, what not to do, and how to avoid the traps that regularly catch people out.

What a Finance Condition Actually Does

A subject to finance condition gives you a set amount of time to apply for a home loan and get a written approval from your bank. If your lender refuses the loan, you can usually cancel the contract and get your deposit refunded.

But Victorian contracts require strict compliance. Missing a date or sending the wrong notice can mean the clause no longer protects you.

The Key Requirements You Must Meet

To rely on the subject to finance clause, you must do all of the following:

1. Lodge a real loan application

You must submit a genuine application to an actual bank or financial institution. A conversation with a broker, an online quote, or an indicative figure is not enough.

2. Match the loan details in your contract

Most contracts list the:

• lender
• loan amount
• approval date

Your loan application must be for the lender and amount listed. If you want to change lenders or borrow more or less, speak with us so we can help you update the contract before you sign.

3. Take reasonable steps to get approval

Banks may ask for payslips, tax returns, bank statements, contracts of sale, or extra documents. You must supply everything they ask for in a reasonable time.

If the bank delays because documents were not supplied, the protection of the condition may fail.

4. Notify the vendor in writing before the deadline

This step is critical.

If your loan is approved, declined, or still pending, you must tell the vendor in writing. Telling the agent does not count. It must go to the vendor’s conveyancer or lawyer.

If you miss the deadline, the vendor can treat the contract as unconditional, even if your bank still has not approved the loan.

If Your Bank Declines the Loan

If your finance is refused before the deadline:

• you may cancel the contract
• you must give written notice
• you may need to provide a copy of the bank’s refusal

Once this is done, your deposit is refunded.

If You Need More Time

Finance delays are common. Banks move slowly, especially on complex loans.

You can ask for an extension, but the vendor does not have to agree. You must ask early. Asking on the day of the deadline is risky. Asking after the deadline is almost always too late.

If no extension is granted and you miss the deadline, the contract can automatically become unconditional.

Common Mistakes That Cause Serious Problems

Buyers often get caught out by:

• assuming verbal approval is enough
• thinking pre approval is the same as full approval
• not applying for the loan listed in the contract
• telling the agent instead of the vendor
• failing to supply documents to the bank on time
• asking for an extension too late
• switching lenders without checking the contract

If any of these happen, you may lose the protection of the clause.

Changing Lenders Midway Through

If your contract names a specific lender, you must request permission to change lenders. If it simply says “a lender”, you can change, but you must still take all reasonable steps and meet the approval deadline.

Conditional vs Full Approval

Conditional approval is not enough. Conditional approval means the bank still requires something before confirming your loan.

A finance clause only protects you once full approval is granted. Do not treat conditional approval as unconditional.

When You Should Get Help

Timing is everything with a finance clause. If you:

• are unsure of the deadline
• want to change lenders
• think your approval may be delayed
• need help wording a refusal notice

get in touch immediately.

A quick call can protect you from an accidental unconditional contract.