Everything you need to know about off-the-plan home loans

An off-the-plan purchase locks in today's price but delays settlement until construction completes. Your deposit sits in trust while the building goes up, but the loan you need at settlement depends on market conditions, lender policy, and your financial position when that settlement date finally arrives, often 18 to 24 months after you sign the contract.

How off-the-plan finance differs from established property loans

Off-the-plan finance requires pre-approval that remains valid until settlement, but lenders reassess your application closer to completion. Most lenders issue conditional approval valid for 90 to 120 days, then require a full resubmission three to six months before the expected settlement date. Your income, employment, credit position, and borrowing capacity at that later date determine whether the loan proceeds. The property's value at completion also matters because lenders use the lower of purchase price or valuation when calculating loan to value ratio.

Consider a buyer purchasing a two-bedroom apartment in Bulimba's Oxford Street precinct for $650,000 with a 10% deposit. They secure pre-approval in mid-2026 based on a $90,000 income and expect settlement in early 2028. If their employment changes, they take on additional debt, or the completed apartment values below the contract price, the original approval may not convert. Lenders build in this reassessment because circumstances shift significantly over 18 months, and they need to confirm both your capacity to service the loan and adequate security at settlement.

Sunset clauses and what happens if construction delays

A sunset clause sets the final date by which the developer must complete and settle, or either party can walk away without penalty. Most off-the-plan contracts in Queensland include sunset clauses 24 to 36 months from the contract date. If the developer cannot settle by that date, you can withdraw and recover your deposit, or you can agree to extend. Extensions require formal variation and often reset your finance timeline.

If construction delays push settlement beyond your lender's resubmission window, you may need to reapply or seek a new lender entirely. Some lenders cap off-the-plan approval validity at two years, so a project that stretches to 30 months may require a second or third application. That reassessment captures any changes to lending policy, such as tighter servicing buffers or reduced maximum loan to value ratios. In our experience, buyers who monitor progress and communicate with their broker six months before the revised settlement date manage this process more smoothly than those who wait for the developer's settlement notice.

Valuation risk and how lenders assess completed stock

Lenders order a valuation once construction reaches practical completion, not when you first apply. That valuation reflects the completed apartment and comparable sales at the time of settlement, which may differ materially from the price you contracted to pay 18 months earlier. If the valuation comes in below the contract price, the lender calculates your loan to value ratio using the lower figure, which can reduce your maximum loan amount or trigger Lenders Mortgage Insurance if your deposit no longer meets the required threshold.

In a scenario where the contracted price is $650,000 but the completed unit values at $620,000, a buyer with a $65,000 deposit (10% of contract price) now holds a 10.5% deposit against the lower valuation. If they originally needed to borrow $585,000, the lender will still approve that amount, but the LVR calculation shifts from 90% to 94.4% on the valuation figure, pushing the buyer into a higher LMI band or requiring additional funds at settlement. This risk is more pronounced in precincts with high volumes of off-the-plan stock completing simultaneously, such as the apartment developments along Bulimba's riverfront, where multiple settlements in a short window can depress immediate comparable sales.

Deposit structures and progress payments during construction

Most off-the-plan contracts require a 10% deposit, typically structured as 5% on exchange and 5% within 14 or 30 days. That deposit sits in a trust account held by the developer's solicitor and is not released until settlement. Some contracts include progress payments tied to construction milestones, such as slab pour or frame completion, though this structure is less common in standard residential apartment sales and more typical in house-and-land packages. Progress payment structures affect your home loan application because lenders need to see evidence of deposit source and confirmation that you can meet each payment stage without additional borrowing.

If you are using the Australian Government 5% Deposit Scheme, you can purchase with a 5% deposit provided the purchase price sits within the applicable cap, which is $1,000,000 in Brisbane and regional centres including Gold Coast and Sunshine Coast. The scheme applies to off-the-plan purchases, but the property must be your intended owner-occupied residence and you must meet first home buyer eligibility at the time of settlement, not just at contract. Some lenders on the scheme panel have additional overlays for off-the-plan stock, such as excluding buildings above a certain height or developments with more than a specified number of units, so confirming lender appetite at the outset prevents issues later.

What happens between pre-approval and settlement

Between contract and settlement, maintain stable employment, avoid new credit commitments, and keep your broker informed of any changes to income or liabilities. Lenders will request updated payslips, bank statements, and a credit check when you resubmit closer to completion. Any new personal loans, credit card limit increases, or changes to employment type can reduce your borrowing capacity or delay final approval.

We regularly see buyers assume their original approval is locked in, then take on a car loan or increase their credit card limit without realising the impact on serviceability. A $30,000 car loan with repayments of $600 per month can reduce borrowing capacity by $120,000 or more depending on the lender's assessment rate, which may be enough to prevent the loan proceeding. If you need to make any financial changes during the construction period, speak with your broker first to understand the impact on your upcoming settlement.

Choosing between variable, fixed, and split rate options for off-the-plan

You select your interest rate structure at the time of formal loan lodgement, not at pre-approval, which means you lock in rates within weeks of settlement rather than when you first apply. If you originally pre-approved when fixed rates were higher and they drop by settlement, you benefit from the lower rate. Conversely, if rates rise, your repayments increase unless you fix.

A split rate structure allows you to fix a portion of the loan, such as 50% or 70%, and leave the remainder on a variable rate. This approach provides partial protection against rate increases while retaining flexibility on the variable portion, which typically allows features like an offset account and extra repayments without penalty. Off-the-plan buyers often prefer a split because it balances certainty at settlement with the ability to adapt as circumstances change, particularly if they plan to upgrade or renovate within a few years of moving in.

Call one of our team or book an appointment at a time that works for you to discuss your off-the-plan purchase and confirm how to structure your finance from contract through to settlement.

Frequently Asked Questions