Can the bank revoke home loan before settlement due to employment changes related to covid-19?

Hi I'm new to property and just signed a contract if sale in Feb for my first apartment a about week before the Covid 19 Madness hit. CBA home loan was approved and now I'm just waiting in settlement in late June.

However, my employment situation has changed, I still have a job for now, but I am on Job Keeper. i have about 10k in emergency savings.

I have received emails from the lender asking about my changes in employment. Even though my income has changed, i can still afford to pay all my expenses with Job Keeper.

Can they revoke my loan even though it hasn't been settled yet?
And if the do will I loose my deposit?
What happens if they reassess the loan and decide I'm no longer suitable for the loan?
Can I loose my deposit?

 

I believe there are provisions for the CBA to revoke their loan approval if they determine your circumstances have changed. Yes you could loose your deposit.

 

Was the contract signed "subject to finance"?

Its an implied belief that loan approval occurs well before settlement and then the loan is unconditional. Thats really not true. Change of circumstance that causes any lender to withdraw their offer may limit the loss to the deposit rather than being sued for consequential loss if you fail to settle and another buyer offers far less. This has always been the case althought rarely heard of. Its now the norm for a lender to ask before booking settlement. Your solicitor should be acting and advising on this to mitigate loss. Many vendors may seek to defer settlement rather than lose a sale.

 

Yes they can and yes you could lose your deposit

 

Most subject to finance clauses expire once a property has a formal approval, so that won't really help in cases like this with delayed settlements.

Possibly yes, Latrobe for example are reviewing cases like these & I suspect others will do it too.

Being with CBA helps here, they won't want to put you in this position, so I believe they'd be unlikely to pull the offer.

 

Provide the legal basis for that assumption. A contract subject to finance does not include a time limit. It applies until the contract completes. Finance is always conditional on the lender...giving finance.

It's as flawed as a otp contract buyer thinking they could obtain finance

 

dont understand this. A subject to finance clause has an expiry date attached to it. Thought the buyer confirms when the finance clause is satisfied?

Say the buyer says the finance clause is satisfied,contract is unconditional but doesnt apply for finance until the last day before settlement for whatever reason. Loan is rejected. The contract is still unconditional?

 

@Trainee has summed it up. Most finance clauses expire after 5, 10, 14, etc days. They don't have the same time period as settlements in most cases.

 

While you can write such a clause, the seller would have to be stupid or really desperate to accept a finance clause that stays in effect until settlement.

 

Yep I remember the first property we purchased years ago, the selling agent asked us to sign a new copy of the contract a day or two after we advised them that finance was unconditionally approved by the lender.

I also always assumed that the purchaser had to advise the vendor if finance fell through during the clause expiry period, otherwise no notice was taken as approved.

 

This will depend on the wording of the contract. Most finance clauses that I have seen have a time limit. Such if a finance has not been approved with XXX Bank for $XX by 3pm on the 22nd the purchaser may terminate the contract. Failure to terminate means the contract is still afoot and it will not be possible to terminate after this date and time.