Making an Offer ‘Subject to Finance’: What You Need to Know
Protecting Yourself When Buying a Home
Falling in love with a dream property only to struggle with loan approval is a nightmare scenario for any homebuyer.
📌 If you back out of a contract due to loan rejection, you could lose your deposit—unless your offer is subject to finance.
Why Make an Offer Subject to Finance?
What Is a Finance Clause?
A subject to finance clause allows homebuyers to withdraw from a purchase if mortgage approval is not secured within a set timeframe.
📌 Key benefits:
✅ Provides an exit strategy if financing falls through
✅ Helps avoid financial risk and losing your deposit
✅ Reduces pressure to accept unfavourable loan terms
💡 Learn more about finance clauses and property contracts at: Real Estate Institute of Australia (REIA).
Drawbacks of Buying Subject to Finance
Seller Agreement Is Not Guaranteed
🔹 In a fast-moving property market, sellers may decline offers with finance conditions.
🔹 Homes sell in as little as 10 days in some areas—reducing seller incentives to accept conditional offers.
🔹 Auction purchases are unconditional, meaning buyers cannot alter contracts after the sale.
Should You Get Loan Pre-Approval?
Why Pre-Approval Matters
Having home loan pre-approval removes uncertainty and strengthens your bargaining power.
📌 Pre-approval benefits:
✅ Gives confidence to make offers without financial worries
✅ Increases your chances of securing a home faster
✅ Helps clarify loan limits before house hunting
🔎 Want to explore pre-approval options? Visit the Australian Financial Review for market insights.
Buying Before Selling: Is It Possible?
How Bridging Loans Can Help
If you find a new home before selling your current property, a bridging loan can help cover the financial gap.
📌 How bridging loans work:
✅ Typically require interest-only repayments
✅ Offer short-term funding until the sale of your old home
❌ Usually have higher interest rates than traditional loans
📌 For more information on bridging loans, visit: Moneysmart. Or our Blog on Bridging Loans here
Get Expert Help Before Making an Offer
Speak to a Mortgage Broker First
Navigating home financing options can be complex, but CBM Mortgages can help!
📞 Contact CBM Mortgages today to explore:
✅ Finance clauses & pre-approval for home loans
✅ Bridging loans to purchase before selling
✅ The best mortgage options for your budget
Read our blog on the loan approval process here or how to speed up a mortgage approval here
Disclaimer
This article provides general information only and does not constitute financial advice. Always consult a qualified financial advisor or mortgage broker to assess your personal situation before making any financial decisions.
Written by Craig McDonald 14/06/2025
