A common misconception is that a declined loan approval automatically ends your contract. Unfortunately, this is not always true. There are important legal steps you must follow to avoid being in breach of your contract of sale.

Does a Declined Finance Approval Automatically Terminate Your Contract?

Short answer: No.

Even if the lender refuses your loan, the contract does not automatically cancel unless you follow the correct process under your finance clause. This is where many buyers are caught out.

Key points to understand:

• You must notify the vendor in writing within the finance approval deadline
• You may be required to provide evidence of your loan refusal
• If you miss the deadline, the seller may treat the contract as unconditional
• You could risk losing your deposit or facing legal consequences

This is why it’s critical to seek immediate advice from your conveyancer.

What Should You Do When Your Finance Falls Through?

If your finance is declined, here’s what we recommend:

1. Contact your conveyancer immediately

We will review your contract, check your finance clause, and confirm your rights and obligations.

2. Request written confirmation from your lender

You’ll need an official finance-declined letter to support your request to end the contract.

3. Notify the vendor in the correct legal format

This step must be done properly and within the deadline. In some cases, your estate agent may also need to be notified.

4. Review your options

Depending on your circumstances, you may:

• Seek an extension for finance approval
• Switch lenders
• Provide additional financial documentation
• Proceed with the contract if finance can still be secured

Every situation is different, and we guide you through each option with clarity.

Why Professional Conveyancing Advice Matters

Finance delays and declined applications are more common during peak seasons like Melbourne’s Spring Property Market. When things move quickly, buyers can overlook important contract conditions.

At All Hours Conveyancing, we help you:

• Understand your finance clause
• Avoid missing critical deadlines
• Communicate correctly with vendors and agents
• Protect your legal and financial interests
• Prevent costly mistakes that could affect your deposit or settlement

Our goal is to ensure you move forward with confidence, even when the unexpected happens.

Need Advice About Your Contract or Finance Clause?

We’re here to help buyers feel informed, supported, and confident at every stage of their property journey.

📞 03 9649 7832
📧 info@allhoursproperty.com.au
🌐 https://allhoursconveyancing.com.au
📍 Level 1, 530 Little Collins St, Melbourne VIC

Watch the Video: What Buyers Need to Know When Finance Is Declined