Preparing financially
Financing an off-the-plan purchase
Why signing and settlement are separate finance events, sunset-clause timing risk by state, valuation shortfalls at completion, and how deposit bonds actually work.
- Signing the contract and applying for the settlement loan are separate events, often years apart — revisit your finance at three points, not just at signing.
- Whether a sunset clause lets either party terminate depends on the contract and your state's legislation — NSW, Victoria and Queensland have all restricted developer termination rights.
- Final approval uses a valuation done close to settlement, not the original contract price — a lower valuation means funding the difference in cash.
- A deposit bond needs the seller's acceptance, and replaces the cash transfer only — it doesn't remove your obligation to fund the deposit and settlement.
Signing and settlement are separate events, often years apart
The core finance issue with an off-the-plan purchase: you sign the contract now, but you don't apply for the settlement loan until much later, sometimes years apart. Pre-approval obtained at signing isn't funding held in reserve until settlement — it typically expires long before construction finishes. Broadly, revisit your finance at three points: before signing (a realistic view of what you can likely afford by completion, not just today), during construction (checking nothing material has changed), and once settlement becomes reasonably foreseeable (actually applying for the settlement loan) — rather than assuming the arrangement made at signing simply carries through.
Sunset clauses — a finance timing risk, not just a legal one
An off-the-plan contract typically includes a "sunset date" — a deadline for a specified event, usually registration of the plan. Whether either party can actually terminate if that date passes depends on the contract and the applicable state legislation, not one uniform national rule — some states have materially restricted a developer's ability to terminate. In New South Wales, a developer generally can't unilaterally rescind after the sunset date without either purchaser consent or Supreme Court approval. In Queensland, reforms limit developer termination under a sunset clause for land contracts, generally requiring the buyer's written consent (though the reform doesn't cover every off-the-plan contract type). Get advice from a conveyancer or solicitor in your own state about your actual termination rights — the finance consequence for you either way is the same: a delay can mean your original pre-approval or finance planning is no longer current by the time settlement is actually due. In Victoria, if the plan of subdivision isn't registered within the contract's specified time or the 18-month default, you have the right to end the contract and recover your deposit (Consumer Affairs Victoria, verified 7 Aug 2026); since 23 August 2018, the reverse is also restricted — a developer generally can't use a sunset clause to cancel and re-sell at a higher price without your written consent or a Supreme Court order (Maddocks Lawyers (legal practice commentary), verified 3 Aug 2026). Either outcome changes your settlement timeline, which is exactly why finance planning needs revisiting if a sunset dispute arises — see off-the-plan property for the fuller legal detail.
What if the completion valuation comes in lower than the contract price?
Your lender bases final approval on a valuation done close to settlement, not the price you agreed years earlier. If that valuation is lower than your contract price, your loan is based on the lower figure — you need to fund the difference in cash, not just the deposit you've already paid. See deposit, LVR and LMI for how a lower valuation affects your LVR and can trigger LMI you weren't expecting.
Deposit bonds
A deposit bond can substitute for a cash deposit at exchange — but the seller has to actually accept this arrangement, so confirm that before assuming it's available. A bond replaces the initial cash transfer; it doesn't remove your obligation to provide the deposit amount or complete settlement — you still need to fund the deposit and the rest of the purchase price at settlement. Whether keeping your cash invested in the meantime is genuinely worthwhile depends on the bond's fees against what that cash could otherwise earn, and your own liquidity needs — not an automatic benefit. Whichever way you fund it, confirm a Victorian off-the-plan deposit is held in a genuine trust account for the construction period, not released early to the developer (Arro Lawyers (legal practice commentary), verified 3 Aug 2026) — if it isn't, and the developer becomes insolvent before settlement, you risk losing it.
Practical checklist
Before and during an off-the-plan purchase
- Get advice on your actual termination rights under the sunset clause in your state
- Confirm whether the seller will accept a deposit bond before assuming it's available
- Revisit your finance arrangements during construction, not only at signing
- Get updated income, liability and deposit documents ready as settlement approaches
- Plan for a possible valuation shortfall and the cash needed to cover it
Questions for a professional
- What happens to my pre-approval if settlement is delayed past its expiry?
- Under my state's rules, can the seller actually terminate if the sunset date passes?
- How would a lower valuation at completion affect my loan and deposit?
Official resources
Sources and methodology
- An update on vendor termination rights in off-the-plan sales — Maddocks Lawyers (legal practice commentary) (retrieved 3 Aug 2026)
- Buying off-the-plan — Consumer Affairs Victoria (retrieved 29 Jul 2026)
- Off-the-Plan Property Purchases in Victoria: Legal Risks and Benefits — Arro Lawyers (legal practice commentary) (retrieved 3 Aug 2026)
Figures on this page are drawn from Delora's local knowledge graph, refreshed from these primary sources and checked for changes on a regular schedule. If a figure here looks out of date, the official source above is always the authority — please let us know.