What You Should Know Before Buying ‘Subject to Finance’
Found a home you love but not 100% sure you’ll get loan approval? Making an offer ‘subject to finance’ could give you some breathing room. Here’s how it works—and what to watch out for.
Imagine this: you’ve found the perfect place, made an offer, and handed over your deposit. But then your loan application falls through. Now what? Without the right clause in your contract, you could be at risk of losing your deposit.
That’s where making an offer ‘subject to finance’ comes in.
A subject to finance clause means that if you can’t secure loan approval within a set timeframe, you can walk away from the deal with your deposit intact. It’s a safeguard against scrambling for last-minute finance and potentially ending up with a loan that’s not the right fit for you.
The Catch: Sellers Don’t Have to Agree
While this clause is great for buyers, sellers aren’t always keen. In a hot property market where homes are selling in as little as 10 days, sellers may prefer offers without conditions.
If you’re buying at auction, be aware that sales are usually unconditional—meaning you won’t get the chance to include a subject to finance clause.
Get Ahead With Pre-Approval
To boost your chances of getting your offer accepted, consider getting your home loan pre-approved before you start house hunting. Pre-approval gives sellers more confidence in your ability to secure financing, which could make them more willing to accept your offer—even with a subject to finance clause.
What if You Want to Buy Before You Sell?
If you already own a home and want to buy before selling, you might not need a subject to finance clause—but you’ll still need to consider how to fund the purchase.
A bridging loan could help cover the gap between buying your new home and selling your current one. These loans typically require interest-only payments, which can ease the financial burden temporarily. However, they usually come with higher interest rates than standard home loans, so it’s important to weigh up the pros and cons.
Let’s Make Your Next Move Stress-Free
Buying a home—whether it’s your first or your next—can be exciting but also a bit daunting. If you’re unsure about your financing options, let’s chat. From pre-approvals to bridging loans, we’ll help you navigate the process so you can buy with confidence.
Disclaimer: This article provides general information and should not be considered financial or tax advice. It does not take into account your personal circumstances. Always seek professional advice before making financial decisions. This content is protected by copyright laws and cannot be modified, reproduced, or republished without prior written consent.
