Buying off the plan can offer advantages, but the finance side works differently to buying something you can walk through today — worth understanding well before you sign a contract.

The gap between contract and settlement matters

Off-the-plan purchases can involve a settlement date one, two or more years after you sign the contract. Your finance approval, however, is generally only valid for a limited period, meaning formal loan approval usually can't be finalised until much closer to actual settlement.

Valuation risk is a real consideration

Because the final valuation happens near settlement, not at contract signing, there's a chance the completed property values differently to the original contract price — which can affect your required deposit or LVR at the time you actually need finance.

Sunset clauses and developer risk

Off-the-plan contracts typically include a sunset clause, giving the developer (and sometimes the buyer) the right to terminate if construction isn't complete by a certain date. Understanding this clause, alongside the developer's track record, is a conversation worth having with your solicitor before you commit.

Chris Brown

Chris Brown

Managing Director & Finance Broker at New Vision Financial Services, a credit representative under Australian Credit Licence 384704 and a member of the FBAA and AFCA. More about Chris →

General information only. This article is general in nature and doesn't take into account your personal financial situation, objectives or needs. It isn't tax, legal or financial advice. Lending criteria, product availability and policies vary between lenders and are subject to change — always confirm current detail with your broker before making decisions.

Frequently asked

Can I get finance pre-approved years before settlement?

You can get an early indication, but formal loan approval is usually only arranged closer to actual settlement, since pre-approvals typically expire well before an off-the-plan settlement date arrives.

What happens if the property value falls before settlement?

If the settlement valuation comes in lower than the contract price, you may need to cover the difference with a larger deposit, or in some cases the finance may not be approved for the full purchase price.

Should I use the same broker throughout the process?

It helps — a broker who's aware of the contract from the outset can plan ahead for the eventual finance application, rather than starting from scratch as settlement approaches.