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Explaining the "Subject to Finance" clause

When diving into the realm of property transactions, particularly in the dynamic real estate market of Melbourne, understanding the intricacies of contractual clauses is paramount. One such clause that holds significant weight in property transactions is the "subject to finance" clause. As a seasoned mortgage broker with years of experience in the Melbourne real estate landscape, I, Steve Keramidas, am here to unravel the mystery behind this crucial clause.

Understanding the "Subject to Finance" Clause
Understanding the "Subject to Finance" Clause

Understanding the "Subject to Finance" Clause:

The "subject to finance" clause is a common provision included in property purchase contracts. Essentially, it stipulates that the buyer's obligation to proceed with the purchase is contingent upon securing satisfactory finance approval from a lender. In other words, if the buyer is unable to obtain financing within the specified timeframe and under the agreed-upon terms, they have the right to terminate the contract without penalty.

Key Components of the Clause:

  1. Finance Approval Period: The contract will specify a timeframe within which the buyer must obtain finance approval. This period typically ranges from 14 to 21 days, although it can vary depending on the negotiation between the parties.

  2. Satisfactory Finance Approval: The clause usually outlines the conditions under which finance approval is deemed satisfactory. These conditions may include the loan amount, interest rate, loan term, and any other terms deemed essential by the buyer.

  3. Notification Requirement: The buyer (through conveyancer or solicitor) is typically required to notify the seller in writing within the finance approval period if they are unable to obtain satisfactory finance approval. Failure to do so may result in the clause being waived, and the contract becoming unconditional.

Benefits of Including a "Subject to Finance" Clause:

  1. Risk Mitigation: For buyers, the clause provides a safety net by allowing them to back out of the contract if they are unable to secure financing. This protects buyers from potential financial hardship or legal ramifications.

  2. Flexibility for Buyers: The clause provides flexibility for buyers to explore different financing options and secure the most favorable terms. If they are unable to obtain satisfactory finance approval within the specified period, they have the option to withdraw from the contract without financial repercussions. This flexibility allows buyers to make informed decisions and pursue alternative financing arrangements if needed, ensuring they secure the best possible loan for their circumstances.

  3. Peace of Mind: Buyers can proceed with the purchase with confidence, knowing that they have a specified period to secure financing without risking their deposit or facing legal repercussions.

Working with a Mortgage Broker:

Navigating the complexities of finance approval can be daunting, especially for first-time buyers or those unfamiliar with the intricacies of the lending process. As your trusted Melbourne mortgage broker, I provide personalised guidance and support throughout the finance approval process. From assessing your financial situation to securing the most favourable loan terms, I'm here to ensure a seamless experience.


The "subject to finance" clause serves as a crucial safeguard for buyers in property transactions, offering them protection and peace of mind. By understanding the intricacies of this clause and partnering with a knowledgeable mortgage broker like myself, buyers can navigate the real estate landscape with confidence and clarity.

If you're considering purchasing a property and want to learn more about the finance approval process, contact me, Steve Keramidas, your trusted Melbourne mortgage broker. Together, we'll ensure that your property purchase journey is smooth and successful.


Disclaimer: This article provides general information only and may not reflect the publisher’s opinion. None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication. This publication or any part of it may be reproduced only with the publisher’s prior permission. It was prepared without taking into account your objectives, financial situation or needs. Please consult your financial adviser, broker or accountant before acting on information in this publication.



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