In Queensland, the Finance Date Contract Clauses refer to the period of time a buyer has to obtain formal finance approval for the purchase after entering a contract to buy a property.
Why does it exist?
To give banks and lenders the time they need to formally assess the borrower and that the property is acceptable security for a loan.
How long does it last for?
Industry standard is approaching 21 days (includes weekends and public holidays) but it can be any period of time agreed to by both the buyer and the seller.
What day does it start?
The day the contract is dated regardless of whether this is a business day or not.
When does it end?
At 5pm on the day noted in the finance clause. If this is a non-business day, the expiry date carries forward to the next business day.
What does the buyer have to do during the finance period?
Make a formal application for a loan with your broker. Need to supply all documents including payslips, statements of savings etc etc. The bank needs to undertake a full assessment of this information and in most cases will also arrange an independent valuer to value the property. Once the bank issues a formal letter of approval, forward this letter immediately to your solicitor.
Can I change my mind about the contract during the finance period?
No. That is what the cooling off period was for. You must make all reasonable efforts to secure finance on or before finance expiry.
What if my finance is declined?
Send a copy of the decline letter to your solicitor who will advise the seller.
What if I need more time?
Let your solicitor know immediately. They can request the seller extend the expiry date to give you more time. The seller can however refuse the request and you could potentially miss out on the property. Never assume finance extensions will be granted and never delay the loan application.
Is there a finance clause when purchasing at an Auction?
No. When buying at Auction, it is assumed you have sufficient finances available prior to bidding. In most cases lenders will not be able to provide an unconditional finance approval for a property prior to the purchase because they cannot assess whether that property is acceptable security for a loan until after the Auction. It is highly recommended you speak to your broker prior to bidding at Auction.