Your guide to securing finance and keeping your purchase on track
Sorting out your finance can be one of the most nerve-wracking parts of buying a property. Between lender approvals, property valuations, and contract deadlines, there is a lot that can go wrong if you are not prepared. The good news? With the right knowledge and professional support, you can avoid unnecessary stress and keep your purchase on track.
In this part of our 7 part guide to buying a property, we’ll take you through the key steps in securing property finance, what to do if you hit roadblocks, and how to manage your obligations after signing. To make things easier, we’ve also included a free downloadable finance checklist and answers to the most common FAQs at the end of this article, so you can stay on top of every detail with confidence.
This part of our & Legal Guide to Buying a Property – The Fast, Easy, and Secure Way will help you:
- Understand the difference between pre-approval and unconditional approval
- Know what to do if your finance is delayed or declined
- Meet your obligations once you have signed the contract
- Recognise why your loan documents need legal review
- Avoid the most common mistakes buyers make when securing finance
Step 1: Understanding Loan Approval and Pre-Approval
One of the biggest misconceptions in property finance is assuming pre-approval means your loan is guaranteed. It doesn’t.
Pre-approval (also called conditional approval) means the lender has agreed in principle to lend you a certain amount based on your financial situation. It is valid for a set period, usually 60–90 days, and is subject to property valuation and further checks. It can be withdrawn at any time if you or the lender’s circumstances change or the property does not meet the lender’s criteria.
Typical pre-approval checks include:
- An assessment of your borrowing capacity
- A credit history check
- Verification of your income and expenses
- Review of your debt-to-income ratio
Unconditional approval (also called formal approval) is the lender’s binding commitment to fund your loan. This is only granted once:
- The property valuation is complete
- All supporting documents have been verified
- Your employment has been confirmed
- All legal and compliance checks are finalised
Even with pre-approval in place, your lender can still decline your loan if the valuation is below the purchase price or if your financial circumstances change before unconditional approval.
Typical approval timeframes:
- Simple applications with major banks: 1–5 business days
- Complex situations (self-employed, multiple income sources): 1–3 weeks
- Digital or non-bank lenders: can be faster, sometimes within hours
- Comprehensive applications requiring detailed review: up to 2–9 weeks
Step 2: What to Do if You Hit Finance Roadblocks
Finance can stall for many reasons, even when you think everything is on track. Common issues include:
Employment changes
- Loss of job or reduction in hours
- Moving from permanent to contract work
- Reduced income or overtime
Property valuation issues
- Valuation lower than the purchase price
- Structural or compliance problems found
- Market conditions affecting comparable sales
Credit history changes
- New debts or credit applications during approval
- Missed payments on existing loans
- Drop in your credit score
Finance approval delays
- Lender backlogs or high workloads
- Complex financial structures or multiple income sources
- Missing or incomplete documents
- Delays in property valuations being booked
If problems arise:
- Contact your lender immediately and ask for a clear update
- Notify your lawyer so they can request extensions or take protective action
- Have alternative lenders or finance options ready as a fallback
- Keep detailed records of all communications with lenders, brokers, and agents
Alternative finance options if your primary lender falls through include non-bank lenders with more flexible criteria, private lending for short-term needs, or family-backed guarantees and loans.
Step 3: What Happens After You Sign – Meeting Your Finance Obligations
Once the contract is signed, time is critical.
If your contract is subject to finance, you usually have 14–21 days to secure unconditional approval. You must take all reasonable steps to obtain finance and, if declined, provide written notice from your lender within the timeframe. Missing the deadline can put you in breach of the contract.
If your contract is not subject to finance (common in competitive markets and always the case for auction purchases), you need to have your finance fully organised before signing. Without this, you risk losing your deposit if the loan falls through.
Your post-signing finance timeline
Days 1–3:
- Submit your formal loan application (if not already done)
- Provide your signed contract to the lender
- Arrange the valuation through your lender
- Supply any additional documents promptly
- Confirm with your loan officer that they have everything they need
Throughout the process:
- Respond immediately to lender requests
- Avoid job changes, new loans, or large purchases that affect your borrowing
- Keep your lawyer updated on finance progress
Final weeks before settlement:
- Obtain unconditional loan approval
- Have your lawyer review your loan and mortgage documents before signing
- Sign the contracts and arrange building insurance
- Confirm settlement funds are ready at least 48 hours before settlement
Step 4: Understanding Your Loan and Security Documents
When your loan is approved, you will receive detailed documents that create binding obligations. These usually include:
- Loan contract – outlining interest rates, repayment terms, and your responsibilities
- Mortgage document – giving the lender security over your property
- Terms and conditions – setting out all the rules that govern your loan
- Insurance requirements – specifying the coverage you must maintain
Loan documentation is complex and heavily weighted in the lender’s favour. A property lawyer will review these documents to make sure you understand:
- Your repayment obligations and what happens if you fall behind
- Situations where the lender can demand immediate repayment
- Your rights regarding property improvements, leasing, or selling
- Insurance requirements and consequences if you fail to comply
- How interest rate changes and fees are applied
Common issues lawyers uncover include unfair default provisions, hidden fees, overly restrictive conditions, and excessive insurance demands.
Step 5: Practical Tips for Property Finance Success
Before applying:
- Check and, if necessary, repair your credit score
- Gather payslips, bank statements, and tax returns
- Reduce debts to increase borrowing capacity
- Save a genuine deposit and avoid last-minute transfers
During the process:
- Respond quickly to lender requests
- Keep your employment stable until after settlement
- Avoid new credit applications or large purchases
Common mistakes to avoid:
- Assuming pre-approval guarantees finance
- Applying for pre-approval too early and letting it expire
- Not reading your finance clause carefully
- Failing to notify your lender or lawyer about problems immediately
- Exchanging contracts late on a Friday without time for processing
Key Takeaways
- Pre-approval is not a guarantee – secure unconditional approval before you commit
- Finance clauses protect your deposit but have strict requirements and deadlines
- Timing matters – allow enough time for the approval process and have backup options
- Always have your loan documents reviewed by a property lawyer before signing
The Value of Legal Guidance in Property Finance
At & Legal, we do more than help you understand your loan terms. We ensure your contract protects you, your finance obligations are clear, and any risks are identified before they become costly problems. Whether you choose our Essential, Premium, or Elite Conveyancing Package, you will receive expert guidance tailored to your situation, transparent pricing, and the peace of mind that your property purchase is in safe hands.
Explore our Conveyancing Packages or call us today to discuss your property purchase.
Download Your Property Finance Checklist
Want to make sure you never miss a step? Our Property Finance Checklist covers everything from pre-purchase preparation to settlement day. It’s the perfect companion to this guide and will help you stay organised throughout the process.
Print it, keep it handy, and tick off each step with confidence.
FAQS
How long does loan approval take?
Approval time depends on your lender, the complexity of your application, and current market conditions. Simple applications with major banks may be approved in 1–5 business days, while more complex situations such as self-employment or multiple income streams can take 1–3 weeks or more. Comprehensive assessments involving multiple properties, guarantors, or unusual lending conditions can stretch to 9 weeks. Digital lenders may process applications much faster, sometimes within hours, but their criteria and loan features can differ from traditional banks.
Can I buy without a finance clause?
Yes, but this is higher risk. Without a finance clause, you must have your finance fully organised before signing. If your loan is delayed or declined, you may lose your deposit and could face further legal consequences. Many auction purchases are unconditional, meaning buyers must be certain of their borrowing capacity before bidding.
What happens if my property is valued lower than the purchase price?
You may need a larger deposit, renegotiate the price, or find a different lender.
If the lender’s valuation is lower than what you have agreed to pay, you may need to contribute more cash to make up the shortfall, renegotiate the purchase price with the seller, or find a lender willing to value the property higher. In some cases, private lending or a family guarantee may bridge the gap. Your lawyer can guide you through renegotiation or exiting the contract if a finance clause applies.
Do I need insurance before settlement?
Yes. Lenders require proof of building insurance before settlement to protect their interest in the property. Even if you are not required to by the bank, arranging insurance early ensures you are covered from the moment you take on legal responsibility for the property.
Should my lawyer review my loan documents?
Absolutely. Loan and mortgage documents are legally binding and heavily in the lender’s favour. A lawyer will identify any unfair provisions, hidden fees, or restrictive conditions, explain your rights and obligations in plain language, and ensure you understand the long-term commitments you are making. This review can prevent costly issues years down the track