What if I change my mind about buying a house?
Buying a home is a big step, but what happens if you have a change of heart? Will you lose money, and can you pull out of a house sale before settlement?

Buying a home is a big step, but what happens if you have a change of heart? Will you lose money, and can you pull out of a house sale before settlement?
KEY POINTS:
- Some states and territories offer short cooling-off periods, during which you can change your mind about certain house sales without incurring major financial penalties.
- Changing your mind after you have signed an unconditional contract of sale can be very costly, and you might even be forced to go through with the sale.
- It’s advisable to get a trained legal professional to review any house sale contract before you sign on the dotted line.
Buying a home means signing a contract of sale, which is a legally binding document. There can be opportunities to back out of the purchase if you change your mind, although it may leave you out of pocket. The key is to know what type of contract you’re signing, and to think about adding conditions that may protect you from losing your deposit if you decide not to go through with the sale.
House hunting can be a lot of fun, but it can also be a long and exhausting process, which can sometimes lead to rash decision making. So when you do find a property you love – and the seller accepts your offer – it’s worth hitting the pause button for a moment. What if you change your mind about buying the house? Worse still, what if you can’t secure a home loan to go ahead with the purchase, or the place turns out to be full of termites?
With situations like these, it pays to understand what happens if you change your mind about buying a house.
When can you change your mind about buying a house?
The question of whether you can change your mind and back out of a property purchase hinges on whether you’ve signed an unconditional or conditional contract of sale. Here’s what you need to know:
How an unconditional contract works
An unconditional contract is a straight sales contract that isn’t dependent on any conditions being met for the sale to go through. If you and the seller (or ‘vendor’) agree on a price and you sign the contract with no questions asked, then you can pay the deposit (usually 10–20% of the agreed price, but this can vary) to cement the deal. The seller also signs a copy of the contract, and you each receive a copy in a process known as an exchange of contracts.
At this point, you may be entitled to take advantage of a cooling-off period. It’s during this time that you can get out of an unconditional contract and still get most of your deposit back.
Be aware: cooling-off periods do not apply to auction sales. If you’re the winning bidder when the hammer falls at an auction, there’s no cooling-off period.
How long is a cooling-off period?
Whether or not you’re entitled to a cooling-off period, and how long it lasts, varies between Australia’s states and territories, as does the amount of your deposit you may forfeit:
- NSW: You have a cooling off period of five business days from the exchange of contracts, although you will forfeit 0.25% of the purchase price if you pull out of the sale. This works out at $250 for every $100,000 of the agreed sales price. The cooling-off period for off-the-plan properties is longer (10 business days) reflecting the more complex nature of the contracts involved.
- VIC: You have a cooling-off period of three business days from the time you, not the seller, sign the contract. If you renege on the deal, you’ll forfeit $100 or 0.2% of the purchase price, whichever is greater.
- QLD: The cooling-off period is five business days from the exchange of contracts. If you back out of the sale, the seller can hold onto 0.25% of the purchase price.
- SA: A cooling-off period of two business days applies for the purchaser once they sign the contract. If you decide not to go ahead with the purchase, you may lose $100 of your deposit.
- WA: No cooling-off period applies in WA unless the buyer and seller agree to add a cooling-off period to the sale contract.
- ACT: The cooling-off period is five business days from the exchange of contracts. You forfeit 0.25% of the purchase price if you choose not to go ahead with the sale.
- NT: In the Northern Territory, a cooling-off period of four business days from the exchange of contracts applies. You’re entitled to a full refund of your deposit during this time.
- TAS: No cooling-off period applies to any sale of property in Tasmania.
Can you pull out of a house sale before settlement?
Generally, yes, but the consequences will differ depending on the stage at which you back out. Once you’ve signed an unconditional contract, the sale process moves from exchange to settlement. This is when the legal work and conveyancing are completed to transfer the property out of the seller’s name and into your name.
A lot can happen during this time. You may struggle to get home loan finance, the home may receive a poor pest and/or building report, or you may simply see another property that you prefer. Whatever the case, once the cooling-off period is over, pulling out of a house sale before settlement can be very expensive.
The sale contract will often outline what happens under these circumstances. But, as a rule, you will likely lose the full amount of your deposit. You may also be asked to compensate the seller for any expenses they have incurred regarding the sale. In a worst-case scenario, the seller can take legal action to force you to proceed with the purchase.
How a conditional contract works
Signing an unconditional contract brings plenty of risks. These risks can be reduced by setting a few conditions of your own regarding the sale. This involves negotiating with the seller to have one or more conditions written into the sale contract, so you and the vendor each sign what is called a ‘conditional contract’.
Adding conditions of your own means the sale will only go ahead if those conditions are met. The conditions you set can vary: For example, you may make the sale conditional on a problem-free pest and building inspection, or on gaining approval for a home loan. You could even set both conditions as requirements in the contract.
It’s common for sale contracts to include a ‘subject to finance’ or ‘subject to loan approval’ condition. Not only does this give you time to arrange a home loan (if you haven’t done so already), it also means that if you don’t get your home loan approval, you can choose to end the contract and still get your deposit back.
However, contracts are complex legal documents, so you need to be sure your ‘subject to’ clauses are correctly worded. This is why it’s important to consider getting help from a legal representative, who will be able to make any amendments to the contract.
Explore Further→ How to negotiate buying a house
The pros and cons of a conditional contract
The biggest benefit of a conditional contract is that it gives you more scope to set and meet conditions of sale without the risk of losing your deposit. These conditions of sale could include arranging finance or receiving a satisfactory building report.
The downside of a conditional contract is that the property seller/vendor doesn’t have to agree to add any of your conditions to the contract. The more conditions you ask for, or the more demanding the conditions, the more likely the seller may be to reject your offer.
Ultimately, it’s important to consider having a sale contract reviewed by a solicitor or conveyancer before you sign on the dotted line. If the seller agrees to the conditions you request, it’s far more likely that you can walk away from the sale without being left seriously out of pocket if you change your mind.
Cover image source: takasuu/istockphoto.com.au.
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.

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The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.