Off-the-plan finance: the risk sits at completion

One contract, two moments in time

Every other purchase compresses the decision into a few weeks: you inspect, you exchange, the lender values the property, you settle. Off-the-plan splits that into two moments that can sit two or three years apart. You commit to a price at the first moment and the lender does almost all of its real work at the second, when the building is registered and a title exists to mortgage.

That structure is not a defect — it is how the product is sold, and it is why buyers get a fixed price on a dwelling nobody has built yet. But it means the ordinary questions have unusual answers. Your valuation is not the number you agreed to. Your approval is not the approval you settle on. Your borrowing capacity is not the one the assessor measured. Each of those is re-established near completion, under whatever rates and policies exist then.

What the current market does to a settlement valuation

The valuation supporting your loan is prepared close to registration, using comparable sales from the months before it. If values have fallen between exchange and completion, the valuer is working from evidence that reflects the fall while your contract price still reflects the market that existed when the display suite was busy.

That is the live position rather than a hypothetical. Cotality recorded a 0.9 per cent national fall in August 2026, a fifth consecutive monthly decline, leaving values 3.6 per cent below the March 2026 peak, with Sydney down 1.4 per cent for the month and Melbourne and Canberra down 1.1 per cent. Anyone completing on a contract signed in 2024 or early 2025 is settling into a weaker market than the one they bought in.

New apartment stock carries an additional problem. The most comparable sales to your apartment are the other apartments in your own building, sold off the plan at the same price list. Valuers treat first-hand developer sales cautiously as evidence, particularly where incentives such as rebates, furniture packages or paid strata levies were bundled into the price, because those inflate the recorded figure without adding value to the security.

Your approval does not stretch to meet the build

A formal pre-approval typically runs 90 days, extendable to around six months with updated documents. No Australian lender issues an approval that survives a two-year construction program, and no lender fixes a rate that far ahead. Whatever you were told at the sales office about being "approved", the file is assessed again before settlement.

That reassessment applies the settings in force at the time. The cash rate is 4.35 per cent after three increases during 2026, and APRA reconfirmed the 3 percentage point serviceability buffer in May 2026, so a file is now stress-tested at a materially higher rate than one assessed in 2024. Add the ordinary events of two or three years — a child, a car loan, a job change, a move to self-employment, a partner going to part-time work — and the capacity that comfortably covered the purchase at exchange may not cover it at completion.

There is a further constraint that has nothing to do with you. Most lenders cap their exposure to any single development, commonly somewhere in the range of one in ten to one in three of the units, and once that quota is used the lender declines further loans in that building regardless of how strong the applicant is. Early buyers in a tower have more lender choice than late ones.

Security rules that catch new apartments specifically

Lenders apply minimum internal size policies to apartments, often around 40 to 50 square metres excluding the balcony and car space, and studio or micro-apartments below the threshold either attract a much lower maximum loan-to-value ratio or fall outside policy entirely. Compact inner-city stock is where this bites, and the floorplan in the brochure usually quotes a total area that includes the balcony.

Postcode and high-density restrictions also apply at some lenders, reducing the maximum loan-to-value ratio in suburbs with large volumes of new apartments. Serviced apartments, student accommodation, buildings with restricted-use titles and units subject to a management agreement are treated as specialist security by most lenders and by some not at all.

None of these show up in an advertised interest rate, which is why the correct question before you exchange is not "can I borrow this much" but "which lenders will accept this specific building, at what loan-to-value ratio, and how many loans have they already written in it".

Sunset clauses, delays, and who is allowed to walk away

A sunset clause sets the date by which the development must be registered and completed, and historically some developers used it to rescind contracts and resell into a stronger market. That was curtailed in New South Wales by amendments to the Conveyancing Act in 2015 and in Victoria by the Sale of Land Amendment Act in 2019, both of which broadly require the purchaser’s written consent or a Supreme Court order before a vendor can rescind under a sunset provision. Other states have their own positions and the detail matters.

Delay itself is the more common outcome, and a delay is not usually a right to exit. Your finance ages while the building does not arrive, meaning fresh payslips, a fresh valuation and a fresh credit enquiry, and if your circumstances weakened in the interim the delay is what exposes you. Developer insolvency, defect disputes and occupancy permit hold-ups all sit in the same category of risk that a mortgage broker cannot manage for you.

What your contract says about sunset dates, extension rights, variations to the plans and the consequences of delay is a legal question for the solicitor or conveyancer who reviews it before you sign. It is genuinely worth paying for that review on an off-the-plan contract, which is longer and less standard than an established-property contract.

Deposits, bonds, and the money you cannot get back

The deposit — usually 10 per cent — is generally held in a trust or controlled-monies account until completion, and who receives the interest it earns is set by the contract rather than by convention. Read that clause; on a $80,000 deposit held for two years it is a meaningful number.

A deposit bond is not cash. It is a guarantee issued by an insurer that pays the vendor if you fail to complete, after which the issuer pursues you for the amount paid. It preserves your cash during construction, but it does not reduce your obligation, it costs a premium based on amount and term, and the vendor is not obliged to accept one. Bank guarantees work similarly and usually require the cash to be held anyway.

The part buyers underestimate is that the deposit is the smallest of the amounts at risk. If you cannot settle, the vendor can generally terminate, keep the deposit and sue for the loss on a resale, which in a falling market is the gap between your price and what the apartment fetches later. That is why a settlement-valuation shortfall on off-the-plan stock is a serious problem rather than an inconvenience.

Sequencing an off-the-plan purchase so completion is dull

Practical version: have the contract reviewed by a solicitor before signing, confirm the developer’s incentives and whether they are inside or outside the price, ask which lenders will take that building and how much room is left in their quota, budget a cash buffer specifically for a valuation shortfall rather than relying on the deposit being the whole story, and start the finance again in earnest four to six months before the expected registration date, not four weeks. If Victorian duty relief is part of your numbers, note the off-the-plan concession runs to contracts entered before 21 April 2027 and is open to all buyers, then confirm the current terms with the State Revenue Office.

Azure Home Loans is most useful on this product well before completion, because the options narrow as the registration date approaches. This page is general information current at September 2026 for Australian readers, not credit, legal or tax advice, and the contract terms and lender policies that actually govern your purchase need to be read on your own documents.