Preparing financially
Financing an off-the-plan purchase
Sunset clauses, deposit bonds and staged payments — what to check on the finance side before you sign an off-the-plan contract.
- A sunset clause can allow either party to rescind if the development isn't completed by a set date.
- Long build times mean your finance arrangements may need revisiting well before settlement.
- A deposit bond can substitute for a cash deposit at exchange, but isn't free and doesn't replace needing funds at settlement.
- The property's valuation at completion — not the original contract price — is what your lender will use for final approval.
Sunset clauses
An off-the-plan contract typically includes a "sunset date" — if the development isn't completed and registered by then, either party may be able to rescind the contract. This matters for your finance: a long delay can mean your original pre-approval or even the loan product itself is no longer available or suitable by the time settlement is finally due.
Deposit bonds and staged payments
A deposit bond can substitute for a cash deposit at exchange on an off-the-plan purchase (see the deposit guide) — useful when settlement is years away and you'd rather your cash kept earning interest until then, but it isn't free and doesn't replace needing the actual funds at settlement.
Practical checklist
Before signing an off-the-plan contract
- Check the sunset date and what happens if it's not met
- Ask whether a deposit bond suits your situation better than a cash deposit
- Plan to revisit your finance arrangements as settlement approaches, not just at signing
- Understand that final approval depends on a valuation at completion, not the contract price
Questions for a professional
- What happens to my pre-approval if settlement is delayed past its expiry?
- How would a lower valuation at completion affect my loan?