How buying off the plan works
Buying off the plan can be a great way to buy a new home, but it also means putting money down on a property that hasn't been built yet.
Key takeaways
- Buying off the plan means purchasing a property that is under construction or is going to be built soon.
- If you want to buy off the plan, you'll sign a contract and put down a 10% deposit. But you won't have to sort out the home loan and the full deposit amount until the building is complete.
- Buying a property off the plan could mean snapping up a great apartment at a good price. Or it could mean wasting years while construction drags on.
How to buy off the plan: A step-by-step guide
The typical off the plan purchase works like this:
- Find an off the plan development
- Submit an expression of interest
- Sign the contract and pay the deposit
- Pre-settlement inspection
- Get your home loan organised
- Move in
Let's explore each step in more detail below.
1. Find an off the plan development
Find a development that looks like it suits your needs. You may find listings in the usual property sales sites, such as Domain and realestate.com.au. Work out what your needs are in terms of location, size and features.
This is also the time to do some research on the area around the development and to look into the developer itself.
You should visit the company website, review past and current projects as well as their financial performance to ensure that the developer is in a strong position to carry out the intended works.
You should ensure that the builders for the development are licensed and qualified and you can check this on your relevant state government website. What projects have they completed recently? Have they had any problems on other projects?
2. Submit an expression of interest
Developers may reach out to local real estate agents in an attempt to generate interest in the development. Sometimes you may be able to lodge an expression of interest payment; however, it's important to note that this signals your interest and does not guarantee that the property will be sold to you.
3. Sign the contract and pay the deposit
Once you've selected the location and development project, you'll need to sign a contract of sale for the purchase. Before signing on the dotted line, it is paramount that you seek independent legal advice from a conveyancer or solicitor to ensure that the contract contains all the relevant terms for the exchange.
Contracts should include:
- Cooling off period. In most Australian states, the cooling off period is between 3 and 5 days, meaning you can change your mind about the purchase during this timeframe. However, keep in mind that if you have a change of heart and you decide to withdraw from the purchase, you may be charged a termination fee from the developer which is generally around 0.25% of the purchase price.
- Project plans. The contract should disclose information regarding the specific plans of the build. This should include proposed plans, floor plans and a schedule for the construction. It's important that you fully understand, and are satisfied with, the level of detail that the developer has disclosed regarding the development plans and the quality of fittings and fixtures.
- Inclusions. Make sure that you review the inclusions and warranties in the contract of sale to make sure that if the developer makes changes to the planned build, it will not affect you negatively. It's also important to ensure that the contract specifies the cost of upgrading fixtures and fittings if you are not satisfied with the initial ones. Also check to see if there is a dispute resolution process in place in case there are any delays or other issues.
- Finance. If you're obtaining finance from a lender, you need to ensure the contract is subject to you obtaining the relevant finance. Generally, developers will give you 30 days to obtain finance approval from the date that the contract was signed.
- Building defects. The contract should include a clause stating that the developer is responsible for rectifying any defects in the construction, prior to settlement.
The deposit
Off the plan contracts usually require 10% deposits. You pay this when you sign the contract. Because buildings take a long time to complete, you could pay the deposit and not move in for another year or two.
You pay the rest of the property price at settlement, although usually it's your lender that pays the money. However, you may want to contribute more to the deposit. A 20% deposit is considered the standard size in Australia. Anything under 20% means you may have to pay lenders mortgage insurance (LMI), which can cost thousands or tens of thousands more.
4. Pre-settlement inspection
When the building is almost finished, you will be able to inspect it. The builder will arrange this for you. This is the time to check the project has been completed to the standard you agreed to in the contract.
Check the inclusion list in your contract and make sure everything is there. If there is anything missing, or any defects, now is the time to get the builder to fix them.
5. Get your home loan organised
Settlement is when you take possession of the property and the money changes hands. Before this, you'll need to actually get your home loan organised.
This means comparing home loan rates and finding a suitable loan.
Some Australian lenders are reluctant to provide finance for off the plan purchases because the property may be sold for more than it's worth. In an uncertain market, the property value might decline between the signing of the contract and the completion of the build.
As a result, some lenders will require an 80% loan-to-value (LVR) ratio, while others may require reviews of any pre-approvals they issue at the time you sign the contract. It's a good idea to wait and apply for approval 6 weeks prior to settlement.
6. Move in
Once settlement is finalised you can move in – but your builder is not completely off the hook yet. There is usually a 90-day maintenance period where the builder is obligated to fix defaults or other issues.
But not everything wrong can be considered a defect. There may be cases where a feature you identify as a defect falls within the builder's acceptable standard of workmanship.
Should I buy off the plan or not?
The decision to buy off the plan will vary depending on your investment purpose, the amount of risk you’re willing to endure as well as your personal financial situation.
Benefits of buying off the plan
- Lock in a good price before it rises. A key benefit of purchasing property off the plan is that you can pay the current market value for a property, even though it will be completed in the future, and might appreciate in value by that time (but this is not a guarantee).
- Choice. If you get in early you have the flexibility to choose your purchase from the range of properties for the development project.
- Low initial cost. You only need to provide a 10% deposit upfront. The outstanding balance doesn’t need to be paid until settlement.
- Time. The long settlement period means that you have time to get your finances in order, boost your savings and save for settlement. You may also benefit from capital gains over time.
- FHOG and stamp duty concessions. In Australia, most states provide a first home owners grant (FHOG) for first home buyers purchasing new dwellings rather than existing ones.
Risks of buying off the plan
- Prices can fall before construction is finished. When purchasing off the plan, you run the risk of paying too much for a property if the market enters into a decline.
- Expectations. As many builders don’t allow you to see the property until construction is near completion, there's a risk that the final build may not be what you had in mind.
- Rising interest rates. Interest rates may rise before you settle on the property, which will add to your costs.
- Bankruptcy. There is a risk that the developer may go into liquidation before the build is completed.
- Finance. When you're ready to complete the purchase you'll need home loan approval. And that's never guaranteed, especially if your lender values the apartment at a lower price.
Off the plan regrets? Fewer than you'd think
There's an assumption that people who buy off the plan are the most likely to regret their homebuying decision. But Finder research found the opposite to be the case. A survey of Australian first home buyers found that while 77% of people who brought a property at auction express regrets over their purchase, only 37% of people who bought off the plan say the same.
Source:
First Home Buyer Report 2025
Questions to ask your builder before signing a contract
- Can I make changes to finishes or fixtures in the bathroom and kitchen?
- Can I visit the site during construction?
- Where do I stand if construction is altered from the original plan?
- What are my rights if the design or layout is altered? Can the builder change the design without my consent?
- What are my rights if there are delays?
- Is my deposit secure if the construction doesn’t go ahead?
Frequently asked questions
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