VIC Contract of Sale - Subject to Finance

I note in the Victorian Contract of Sale document, there's a section under "subject to loan" about the "approval date". Is that the expected date where should hear back from our lender? How long would that usually take? (We've already received pre-approval if that helps).
 
The approval date is by when you should have your finance approved. The norm would be about 10 working days, regardless if you've got a pre-approval or not.
 
It does happen for all sorts or reasons. In this case the usual procedure is to get your conveyancer to request an extension to the finance period.
 
When a delay occurs with finance approval, your solicitor / conveyancer will request an extension from the vendor. Usually it is granted as the vendor will not want to lose the sale but depends on the time period required. Recently I sold a property with a 6 month settlement - the chinese group continually requested extensions - at one point - the solicitor and me as vendor ran out of patience and told them to go jump - the contract was rescinded but now I can find a new buyer and I believe there will be a higher price.

As a general rule - always sign subject to finance - so many don't.

Cheers, Ivan
 
A bit over a year ago we had a very tricky purchase. Two previous attempts to purchase the property by other parties have failed on the finance clauses but we though we'd be able to get it through.

The application took weeks. Due to the nature of the deal I instructed the client and their solicitor that under no circumstances should they waive the finance clause.

The finance clause ended up being extended several times and it took about 4 weeks to get it approved. I think at this point the vendor knew how tough a deal it was and they went along with it.

We did end up getting the property financed. A year later it was revalued and with a renovation it increased in value about 40%.
 
'Subject to Finance' Tips

The 'subject to finance' period must allow time for the proposed lender to undertake a valuation. Be guided by your lender/broker how long the entire process will take - usually it's two weeks at a minimum, possibly more, depending on the type of property and accessibility.

Extensions can be negotiated if necessary, as it's in the interests of everyone to get the deal done. However, do not just assume that if you fail to get finance / enough finance that the contract "automatically" terminates. You must ensure the vendor receives written notice that you've exercised your right to terminate. Your conveyancer/lawyer must proactively write to the vendor (email is fine) advising them the contract is terminated.

Good luck! :)

Note: the above is general information and should not be considered as legal advice.
 
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