Top tips to buy off-the-plan as a first home buyer

Why off-the-plan purchases work differently for first home buyers

An off-the-plan property settles months or years after you sign the contract, and that delay creates a series of timing and lending challenges you won't face with an established home. Your deposit sits with a stakeholder until completion. Your pre-approval expires. The property gets valued at settlement, not at contract, which means lender appetite and loan conditions can shift before you take ownership. For buyers relying on the Australian Government 5% Deposit Scheme or state grants, the timing rules and property price caps matter more than they would on a standard purchase. You need to know which date triggers eligibility and which lender will still honour your approval two years from now.

Consider a buyer in Croydon Park who signed a contract in mid-2026 for a two-bedroom apartment settling late 2027. They used a 5% deposit and qualified for the New South Wales stamp duty exemption because the contract price sat below $800,000. Eighteen months later, their lender reassessed the property at settlement and confirmed the valuation matched contract price. The loan proceeded without issue because the buyer had maintained stable employment, avoided new debts, and chosen a lender that writes off-the-plan approvals with extended validity.

How deposit requirements change at contract and at settlement

You pay a portion of your deposit when you exchange contracts, typically 5% to 10% of the purchase price. That amount is held in a trust account until settlement. The balance of your deposit, along with any borrowed funds, is paid at settlement when the property title transfers to your name. If you're using the 5% Deposit Scheme, the government guarantee applies at settlement, not at contract. The lender will assess your financial position again before releasing funds, which means your income, employment, and credit file need to remain stable throughout the construction period.

Some buyers assume they can change jobs, take parental leave, or accumulate new debt between contract and settlement without consequence. Lenders reassess your application closer to completion, and any material change in your circumstances can delay or block the loan. If you're planning life changes during the construction window, speak with your broker about how those changes will affect your borrowing capacity and whether your lender will accommodate them.

Stamp duty and grants: which date counts

In New South Wales, the contract date determines your eligibility for stamp duty concessions and the First Home Owner Grant. If you signed before a threshold or rate change, you're locked into the rules that applied on the day you exchanged. The property value used for stamp duty purposes is the contract price, not the settlement valuation. If you're buying off-the-plan in Croydon Park and the contract price is $780,000, you'll receive full stamp duty exemption even if the completed property appraises higher at settlement.

The First Home Owner Grant of $10,000 applies to new homes with a contract price under $600,000 or a land and build contract under $750,000. Most apartments in Croydon Park exceed the purchase cap, so the grant typically doesn't apply to off-the-plan unit buyers in the suburb. The stamp duty exemption, however, remains the larger concession. For a property at $780,000, the exemption saves around $30,000 compared to standard duty rates.

Lender policy on off-the-plan purchases and valuation risk

Not all lenders write off-the-plan loans, and those that do apply different conditions. Some will lend only on projects from certain developers. Others cap loan-to-value ratios lower than they would for established homes. A lender might approve your home loan application at 95% loan-to-value ratio for an established property but limit you to 90% on off-the-plan, which means you'd need a larger deposit despite qualifying for the 5% Deposit Scheme through a different lender.

Valuation risk sits with the buyer. If the property values below contract price at settlement, the lender will reduce the loan amount to match the lower valuation. You'll need to cover the shortfall with additional savings or negotiate with the developer. This risk is more pronounced in areas with high off-the-plan supply or where the market has softened between contract and completion. Croydon Park's established median has remained stable, but newer apartment precincts nearby have seen valuation gaps where supply exceeded demand. Choose a project with strong pre-sales, an established developer, and a location with consistent demand from owner-occupiers.

Loan pre-approval validity and what happens if it expires

Standard pre-approval lasts three to six months. An off-the-plan purchase settling in 2028 cannot rely on a pre-approval issued in 2026. Some lenders offer extended conditional approvals for off-the-plan buyers, valid for up to two years, subject to reconfirmation of your financial position closer to settlement. If your pre-approval expires and the lender's credit policy has tightened, you may no longer meet their criteria even though nothing in your situation has changed.

In our experience, buyers often underestimate how much serviceability can shift with a small interest rate movement. A lender assessing your application at a floor rate of 6.5% might tighten to 7.0% eighteen months later, reducing your borrowing capacity by tens of thousands. If the valuation at settlement requires a higher loan amount than you were originally approved for, that reduction in capacity can block the purchase. Work with a broker who monitors your approval throughout the construction period and can switch lenders if your current lender's policy changes.

How employment and income changes affect settlement

Your lender will request updated payslips, bank statements, and proof of employment within weeks of settlement. If you've changed jobs, taken a pay cut, or moved to casual or contract work, the lender reassesses your serviceability. Probationary employment is treated differently by each lender. Some accept it with an employment contract and a letter from your employer. Others require you to pass probation before they'll settle the loan.

Buyers moving from full-time to part-time work, taking unpaid leave, or starting a business during the construction period face the highest risk of conditional approval withdrawal. If those changes are unavoidable, discuss them with your broker as early as possible. A lender switch before settlement may be necessary, and that process takes time. Leaving it until the week before settlement rarely works.

Variable or fixed: what makes sense for a delayed settlement

You choose your interest rate structure at settlement, not at contract. That gives you time to watch rate movements and decide closer to completion whether a variable or fixed rate suits your circumstances. If rates have dropped by the time you settle, you benefit from lower repayments. If they've risen, your borrowing capacity may have decreased, but your rate choice remains flexible.

Some buyers lock in a fixed rate months before settlement to secure a lower rate they're worried will disappear. That strategy works only if your lender allows early rate locks and if you're certain the loan will proceed. If the purchase falls through or the lender declines the loan at final assessment, you may face break costs or lose the locked rate. Variable rates with an offset account give you flexibility to park savings and reduce interest while retaining the ability to access funds if settlement is delayed or costs increase.

Choosing a lender that writes off-the-plan loans in Croydon Park

Croydon Park sits within the Canterbury-Bankstown council area, close to transport links and established amenities that make it attractive to first home buyers priced out of inner suburbs. Off-the-plan apartment projects in the suburb tend to attract interest from buyers using low deposit schemes, and lenders assess these projects based on developer track record, pre-sales, and proximity to infrastructure.

A lender that writes one off-the-plan project won't necessarily write another, even in the same suburb. Some lenders exclude buildings above a certain height or developments with a high proportion of investor buyers. Others limit exposure to certain postcodes or council areas. The lender's appetite at contract date may differ from their appetite at settlement, which is why broker involvement at both stages matters. If your lender withdraws from the project before settlement, a broker can move you to an alternative lender without jeopardising the purchase timeline.

Call one of our team or book an appointment at a time that works for you. We'll review your contract, confirm lender appetite for the project, and make sure your approval holds through to settlement.

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