Published on February 26th, 2016

Want to know more about Finance Conditions?

Finance condition

If finance is to be arranged to purchase the property a number of general requirements apply. These requirements are shown on the bottom of the front page of the O & A. Make sure you fully understand the implications of the general requirements. Before signing an offer to purchase property you should be aware that there are different finance conditions contained in various versions of the O & A.

Some finance conditions suggest an offer to lend is the same as finance approval. The implication of this is that you as a buyer would be legally required to accept any loan offer even if the terms of that offer may seem unreasonable to you. To avoid the possibility of having to agree to unreasonable conditions, you should inform yourself as to the usual terms and conditions offered by a particular financial institution before making a finance application. There is provision on the O & A form to specify the name of a financial institution (i.e. lender) from which you intend to seek a loan. Only after being satisfied that the finance terms and conditions are reasonable should you make an offer on the property. Alternatively, you may also wish to consider amending the finance condition on the O & A, either yourself or with the assistance of your professional adviser, to suit your own particular finance requirements. 

If unchanged and no financial institution is specified in the O & A, the standard finance condition requirements that you should be particularly aware of are: 
• the ‘best endeavours’ of the buyer must be used to obtain finance by applying to at least one lending institution (such as a bank, building society, credit union);
• if asked in writing, the buyer must provide written evidence that a loan application was made;
• if a lending institution makes a loan offer, the buyer must immediately notify the seller (or the seller’s real estate agent) in writing; and
• if a loan application is not approved, the buyer must immediately notify the seller or the seller’s real estate agent and provide written evidence of the rejection.

If a loan application is delayed, or likely to be delayed for any reason, you should advise the agent as soon as possible so that the seller can be approached to consider an extension of time. Failing to obtain finance
within the specified timeframe can result in the standard contract being terminated. If a loan is not required and you have immediate access to funds representing the purchase price, the finance section should
be deleted and replaced with the word ‘cash’. Those who sign the O & A should then initial this amendment. 

Beware: If you have applied for pre-approved finance before signing the O & A it is important you make sure the bank’s offer is still valid. Many home loans are granted upon conditions of assessment at the time. If your financial conditions change, the bank may withdraw their offer. See your financial institution for more information on loans and approvals.


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