Subject to Finance Clauses: A Contract-First Guide
Understand the details, deadlines, lender evidence, buyer obligations and notice process that make a property finance condition work.
A subject-to-finance clause makes a property contract conditional in the way its words specify. It is not a national standard, a general loan guarantee or an automatic right to cancel whenever funding becomes inconvenient.
Do not copy a sample clause
Contract forms and finance conditions differ by state, territory and transaction. Ask a solicitor or licensed conveyancer in the property's jurisdiction to draft or review the condition before you sign. Missing details, an unsuitable lender definition or a missed notice deadline can materially change the result.
What the condition does
A properly drafted finance condition identifies the finance event the contract requires and the consequences if it is—or is not—satisfied by the relevant time. Depending on the form, it may state the loan amount, lender, finance date, application standard, notice requirements and what happens to the contract and deposit.
Government consumer guidance shows the variation. Victoria recommends nominating a lender when a private-sale contract is subject to finance. WA's Offer and Acceptance guidance explains obligations under the commonly used WA finance condition and warns that other or older forms may put the clause elsewhere or use different wording. Queensland tells buyers to ensure every agreed condition is in the contract at signing.
Details to check before signing
Finance-condition review
- The amount of finance required and whether it includes costs.
- The named lender, permitted class of lender or broker, if any.
- The exact date and time for approval and how it is calculated.
- What counts as approval: unconditional approval, approval subject to valuation, or another test.
- The loan terms that must be acceptable, if the clause addresses them.
- What applications or efforts the buyer must make.
- What evidence the seller can request.
- Who must receive approval, waiver, extension or termination notice and by what method.
- What happens if neither party gives notice by the deadline.
- How the deposit, costs and any other rights are dealt with if the condition fails.
There is no responsible “standard wording” or universally safe finance period for this article to supply. Your lender can estimate processing needs; your legal adviser must translate those needs into the local contract and leave enough time for valuation and outstanding conditions.
Pre-approval is not final approval
Moneysmart says home-loan pre-approval indicates that a buyer is eligible to apply up to an amount and does not commit them to a loan. The lender may still assess the chosen property, valuation, loan-to-value ratio, updated finances, documents and its current credit policy.
Ask the lender or broker to list everything outstanding in writing. A message saying a file “looks fine” is not necessarily the approval described in the property contract.
Buyer obligations and evidence
Some clauses require the buyer to apply promptly, pursue the application, provide information and notify the seller about approval or refusal. WA Consumer Protection says the commonly used WA form requires the buyer to use the stated efforts, provide application evidence if asked and notify the seller or agent in writing about the outcome. That is a WA-form example, not a rule for every Australian contract.
Keep the application, requested documents, valuation correspondence, lender conditions, refusal, and all notices. Forward them to your legal adviser as they arrive. Do not deliberately frustrate the application or assume silence preserves an exit right.
If the deadline is approaching
Contact the lender and legal adviser before the deadline. Ask the lender for a written status and realistic completion estimate. Ask your adviser whether the contract requires notice and whether to seek an extension. An extension is not automatic; it normally requires the seller's agreement in the form the contract and local law recognise.
Do not wait for the deadline and then assume the condition continues. Depending on the words, inaction may leave a termination right available, allow a party to terminate, deem the condition satisfied, or have another consequence. Only the signed clause answers that question.
If finance is refused or conditional
Obtain the lender's decision and every condition in writing. Approval subject to valuation, mortgage insurance, sale of another property or further credit checks may not match the finance event in the contract. Conversely, a lender's offer may count even if the buyer dislikes its terms, depending on the clause.
Let your solicitor or conveyancer decide whether the contractual test has failed and prepare any notice. Do not promise that refusal automatically returns the deposit or ends the contract without cost. The clause, compliance with buyer obligations and valid service determine the position.
Auction and unconditional contracts
A buyer should not expect to add a finance condition after winning at auction. NSW Government guidance tells auction buyers to confirm what they can borrow and have necessary approvals in place before bidding. Consumer Affairs Victoria says further auction-contract conditions need the seller's agreement. The auction contract and any amendment approved before bidding need legal review.
If a seller asks you to remove or waive a finance condition in a private sale, the risk is that the purchase must still complete if the lender does not fund it. Discuss that exposure with both your lender and legal adviser. Walking away before signing may be safer than signing a commitment you cannot meet.
A finance condition is a timed procedure, not three protective words. Confirm the amount, lender, approval test, buyer duties, deadline, notice and consequence before signing—then manage the lender and contract clocks together.
If a signed contract is already at risk, follow the urgent triage in pulling out after signing a property contract.
General information only, not legal or credit advice. Reviewed 24 August 2026. Obtain advice on the actual contract from a solicitor or licensed conveyancer and written lending information from the lender.