Jul 14, 2026
•
3 min read
Finance Guide
What Happens If Your Finance Is Declined After Signing a Contract?
A declined finance application does not automatically end your Contract of Sale in Victoria. To protect your deposit and avoid breaching the contract, you must act quickly and follow the requirements of your finance clause.
Quick Answer
If your finance is declined, you should:
- Contact your conveyancer immediately
- Obtain a written decline letter from your lender
- Notify the vendor within the required timeframe
- Review options such as a finance extension or alternative lender
Failing to take these steps could put your deposit and property purchase at risk.
Does a Declined Finance Approval Automatically Cancel the Contract?
Short answer: No.
Even if your lender refuses your loan application, the contract remains legally binding unless you properly exercise your rights under the finance clause.
- Notify the vendor within the required timeframe
- Provide written evidence that finance was declined
- Follow the termination procedure outlined in the contract
- Comply with all obligations under the finance condition
Missing these steps may result in losing your deposit or being legally required to proceed with settlement.
Finance Clauses Require Strict Compliance
Buyers relying on a subject to finance condition must comply strictly with the requirements of the contract. This means deadlines, written notices and supporting evidence all matter.
What Should You Do If Your Finance Is Declined?
1. Contact Your Conveyancer ImmediatelyYour conveyancer will review your contract, check the finance clause and confirm important deadlines. |
2. Request a Formal Decline LetterAsk your lender for a written letter confirming finance has been declined. Verbal updates are usually not enough. |
3. Notify the Vendor CorrectlyThe seller is not automatically notified. Proper notice must be served within the contractual timeframe. |
4. Explore Alternative OptionsYou may be able to request an extension, apply through another lender or provide additional documentation. |
Can the Seller Ask for Evidence?
Yes. The vendor may request evidence showing that you genuinely attempted to obtain finance and complied with the requirements of the contract.
- You applied for finance promptly
- You requested the loan amount specified in the contract
- You provided information requested by the lender
- You took reasonable steps to obtain approval
What Happens If You Miss the Finance Deadline?
If you fail to obtain finance approval or properly terminate the contract within the required timeframe, the contract may become unconditional.
This can expose buyers to:
- Loss of deposit
- Default penalties
- Legal costs
- Claims for damages
Why Professional Conveyancing Advice Matters
At Emerald Conveyancing, we help buyers understand finance clauses, monitor critical deadlines and protect their legal and financial interests throughout the conveyancing process.
Need Advice About Your Finance Clause?
If your finance application has been delayed or declined, don’t wait until the deadline has passed.
Contact Emerald Conveyancing today.
