Buying off the plan means signing a contract for a property that is not built yet, with settlement one to three years away. The price certainty and stamp duty savings can be attractive. The finance risk is the part the sales suite does not explain.
The core problem: approval now, settlement later
No lender will give you unconditional approval years ahead. Your pre-approval at signing expires long before the building does, so your finance is re-assessed near completion, at whatever rates, policies and personal circumstances apply then. You are committed to buy; the bank is not committed to lend.
The valuation gap
At settlement the lender values the finished property. If the market has softened and the valuation lands below your contract price, you cover the difference in cash. On a $900,000 apartment valued at $820,000, that is $80,000 on top of your planned deposit. This is the single most common off-the-plan crisis, and buffers are the only real protection.
How to protect yourself
- Keep a cash buffer beyond your deposit, ideally 5 to 10% of the price.
- Keep your finances boring between signing and settlement: no job hopping, no new debts.
- Re-engage your broker 3 to 6 months before completion, not three weeks.
- Check the sunset clause and what happens if the developer delays.
- First home buyers: confirm your grants and duty concessions still apply at your settlement date, not just at signing.
If you are building on your own land, a construction loan with progress payments works differently.
How construction loans work →Nathan stress-tests off-the-plan purchases before you sign: what you can settle at today, and what happens if the valuation comes in short.