When you buy land or make an offer on a property, you’ll often see the phrase “subject to finance” in the contract.
It’s one of the most important protections for buyers — especially first-home buyers.
Here’s the simple breakdown.
1. What ‘subject to finance’ actually means
“Subject to finance” is a condition in your contract that says:
Your purchase only goes ahead if your home loan gets formally approved.
If your bank doesn’t approve your finance, you can legally pull out of the contract without losing your deposit.
It’s basically a safety net that protects you from being locked into a purchase you can’t finance.
2. Why it’s important for first-home buyers
Buying property involves a lot of moving parts — and even if you’re confident, things can still change during the approval process.
Having a subject-to-finance clause protects you if:
- The bank values the property lower than expected
- Your financial situation changes
- Lenders need extra documents
- Interest rate changes impact your borrowing power
- New information affects your approval
Without this clause, you could face penalties or lose your deposit if your loan isn’t approved in time.
3. How long does the finance period last?
Most subject-to-finance clauses give you 14–21 days, depending on:
- The lender
- The type of property (land vs established vs off-the-plan)
- Whether valuations are required
- How quickly documents are supplied
Your broker will usually request the right amount of time to ensure your approval is processed without unnecessary stress.
If more time is needed, an extension can often be requested — but it must be agreed to by the seller or land developer.
4. What you need to do during the finance period
Once the contract is signed, your broker will:
- Order the valuation
- Submit remaining documents
- Finalise lender requirements
- Communicate with the developer or agent
- Work toward formal approval (the green light)
Your role is simple: respond quickly to any document requests so your approval isn’t delayed.
Once the bank gives formal approval, the finance clause is satisfied — and the contract becomes unconditional.
