What Happens if Your Finance Falls Through After Making an Offer

Finance falling through after making an offer is one of the most stressful experiences in the Canterbury property buying process. Here is exactly what happens and how to navigate it.

If Finance Fails During the Condition Period

If your bank declines to provide finance for the specific property during your finance condition period, you can cancel the agreement under the finance condition and your deposit should be returned in full. The key is timing - you must cancel before the finance condition deadline expires. If you allow the deadline to pass without either satisfying the condition or cancelling, the condition may lapse and you may be in a more complex legal position. Contact your solicitor immediately if finance is declined so they can manage the cancellation within the appropriate timeframe.

What You Must Be Able to Demonstrate

Under updated New Zealand sale and purchase agreement terms, a buyer cannot simply claim finance has failed without showing a genuine attempt to obtain it. If a vendor challenges your cancellation, you may need to demonstrate that you genuinely applied for finance, that the bank genuinely declined, and that the decline was not due to you providing false or incomplete information to the bank. Keep records of your bank's written decline and any correspondence about the application.

Why Finance Can Fail on a Specific Property

Finance can be declined on a specific Canterbury property even when you have pre-approval and strong personal finances. Common reasons: the bank's registered valuation comes in below the purchase price and they will not lend at the agreed purchase price; the property has a TC3 land category or complex earthquake repair history that the bank considers unacceptable security; the property has a title issue (defective cross lease flats plan, unresolved caveat) that must be resolved before the bank will lend; or the property type (older Canterbury apartment with complex insurance) does not meet the bank's lending criteria. None of these reflects on your creditworthiness - they are property-specific issues.

What to Do Next

After a finance decline on a specific property, work with your mortgage broker to understand whether the issue is the property (which means looking for a different property) or your personal lending position (which needs to be addressed before you try again). Some Canterbury property-specific declines can be overcome by changing lenders - different banks have different risk appetites for specific property types and TC land categories.

Information from the Real Estate Authority (REA), Settled.govt.nz, and Price My Property NZ. For general information only - always obtain independent legal advice immediately if your finance condition looks like it may fail.