What Does Subject To Finance Really Mean? Oct 20, 2020 | Blog The vast majority of people who look to purchase property will do so with the help of finance. If you need to use finance to purchase a property, then you certainly need to include a ‘subject to finance’ clause in your offer. A subject to finance clause is a condition that is attached to the offer which effectively means the transaction will go ahead if the buyer is able to get finance for the purchase of the property. There are also other common conditions that most buyers will use on the purchase of a property, including being subject to a building and pest inspection or subject to a satisfactory valuation. These are all measures that are put in place to protect the buyer to some degree, most of which are considered standard and aren’t likely to impact the strength of your offer. How Does a Subject to Finance Clause Work? It’s always a good idea to speak to a mortgage broker well in advance of putting an offer in on a property. In reality, it is best that you have also taken this one step further and received a pre-approval from a lender. This not only gives you the confidence that you are going to be able to get finance on a purchase, but it will also give you a very clear indication of how much you can actually spend – including all acquisition costs. A pre-approval can also make your offer stronger in the eyes of the selling agent who is ultimately paid when the transaction goes through. It is also important to understand that a pre-approval isn’t a loan. You still need to make an offer subject to finance and will also need to receive a satisfactory bank valuation – which is why these two conditions go hand-in-hand. Each state has slightly different procedures in place around the offer and acceptance process, with some that are heavily focused on using auctions over private treaty sales. While some states also have cooling off periods. If you put in an offer that is subject to finance and you are running out of time to secure your finance, you will need to get your solicitor to inform the sales agent in writing to get an extension. If you don’t, you could potentially lose your deposit. Finance is arguably the most important part of the property buying process because without it you can’t move forward. Being organised and getting pre-approved will put you in the strongest position to acquire the property you want and to make sure the transaction goes through without a hitch. Get pre-approved finance for your property from YFA Most people use finance to buy property. So, it is critical to include a ‘subject to finance’ clause in the offer. If you don’t include this clause, you could potentially lose deposits in case your loan is not approved or you don’t get the required amount at the right time. Therefore, it is always recommended seeking a mortgage broker’s assistance before putting an offer in on a property. YFA is a trusted home loan broker in Australia, who can guide you through the entire process of getting loans. Know some of the advantages of taking assistance of YFA experts: We will find a better rate for your loan so that you can save on interest with a lower fixed or variable interest rate. Our process is simple and it is easy to apply online, over the phone and in the branch. We can help you settle things in less than a week so that you save time and effort. We have access to 30 lenders and 1,000 different loan products through our well-informed lending specialists We provide assistance at a time and place most convenient for you and your family Tailor-made services that are obligation-free We keep our clients up to date on loan products and their risk appetites
