Key Takeaways

• An off-the-plan loan is assessed again close to settlement, using the completed apartment’s valuation and the lending rules in force at that time.
• Lenders generally lend against the lower of the contract price or the valuation, so a low valuation can leave a cash gap the buyer has to cover.
• Parental leave, reduced hours or a change in employment status during the build can change what a lender approves at settlement.
• Sunset clause protections differ by state, and Queensland apartments sit outside the 2023 consent rules that apply to off-the-plan land.

The contract is signed, the 10% deposit has left your savings account and the apartment you chose from a floor plan is due for completion in 2028. When you ask the bank about the loan, the answer is to come back closer to the time. For many teachers, that is the moment an off-the-plan home loan starts to feel less certain than the purchase itself.

What you pay is fixed on the day you sign, but the loan is not. It is assessed again near settlement, often two to three years later, against a valuation of the finished apartment, your income at that point and the lending rules in force at the time. A first home buyer broker can model those three moving parts long before a settlement notice arrives.

Teachers carry some particular risks through a long build. Parental leave, a move to part-time hours, a contract that ends or a transfer to a regional school can all land between exchange and completion.

How Is Off-the-Plan Finance Different From Buying an Established Home?

Off-the-plan finance differs because the contract, the valuation and the loan are separated by the length of the build, whereas an established purchase usually links all three within a few weeks. Each gap carries its own risk:

Deposit Paid Years Before the Loan Exists

No loan exists at exchange, even though the deposit is paid and the contract binds you to settle. You commit to the full purchase price and usually pay a deposit, commonly 10%, into a trust account, yet no lender has agreed to fund the balance.

Finance Clause Missing From Most Contracts

Most off-the-plan contracts are not subject to finance, so the buyer usually carries the finance risk for the full length of the build.

A declined or reduced loan at completion may therefore put the deposit at risk, depending on the contract terms and how the developer responds. A conveyancer can confirm whether a particular contract carries any finance condition.

Pre-Approval Outlasted by the Build

Pre-approval usually expires long before an off-the-plan apartment is finished, because it typically lasts around 90 days, depending on the lender. A build that runs two or three years will outlast several rounds of it.

It can still help to seek pre-approval as a teacher near exchange, because it tests borrowing capacity against the contract price and can flag problems early.

Formal Approval Granted Only Near Settlement

Formal approval is usually granted only in the final few months before completion, after the lender reassesses the whole application. It checks current payslips, employment status, living expenses, debts and credit history, then applies its serviceability test.

Lending Policy Applied at Settlement

The lending rules that count are the ones in force when the loan is written, not when the contract was signed. Lenders update credit policy, pricing and property acceptance rules regularly, and government settings can change too.

A purchase that sat neatly within one lender’s policy in 2026 may need a different lender in 2028, even if nothing about the buyer has changed.

Security Valued as a Finished Apartment

The lender values the apartment as it stands at completion, and that figure sets the maximum amount it will advance. The valuer looks at the finished product, comparable sales at that time and the state of the local apartment market.

The brochure, the display suite and the original sales campaign carry no weight, which makes the valuation the single figure most likely to reshape an off-the-plan settlement.

What Deposit Options Are Available When Buying Off the Plan?

The way the deposit is paid at exchange changes how much cash stays available during the build and how much is still needed at settlement. The arrangements developers commonly accept are:

Cash Deposit

A cash deposit, often 10% of the price, is paid at exchange and usually held in a trust account until completion. It keeps settlement straightforward because that portion of the price is already paid.

The trade-off is time. Money held in trust for two or three years may earn little or nothing for you, depending on the contract terms, and it is no longer available as a buffer if your income changes during the build.

Deposit Bond

A deposit bond lets you secure the contract without paying cash, because an issuer guarantees the deposit to the developer in exchange for a fee. The fee is generally based on the deposit amount and the length of the bond.

Two details matter off the plan. The bond’s expiry date needs to cover the settlement date, and an extension may cost more or may not be available. The bond also does not replace the deposit. At settlement, the full price is still due, so that amount must come from savings, the loan or both.

Split Deposit

A split deposit pays part of the deposit in cash and covers the rest with a bond. This may suit a teacher who has savings but wants to keep part of them accessible during the build, for example ahead of planned parental leave.

The developer must agree to the arrangement, and the bond portion follows the same expiry and settlement rules as a full bond.

Staged Deposit

Some developers accept the deposit in instalments, for example, part at exchange and the balance by an agreed date during the build. This spreads the cash outlay across a longer period.

Each instalment is a contractual obligation. Missing one may put the buyer in default, so the payment dates need to fit around any planned leave or change in income.

Reduced Deposit

A deposit of 5% of the price is accepted by some developers, which frees up cash at exchange but leaves a larger balance due at settlement.

It also leaves less cushion if the apartment values below the contract price, because any shortfall falls on a smaller equity base.

Deposit terms, bond fees and trust arrangements vary between developers, issuers and states, so this is a general guide only.

How Do Sunset Clauses Affect Off-the-Plan Finance?

A sunset clause sets the date by which the building must be completed or the strata plan registered, and that date shapes when your loan needs to be ready. State law then limits how the clause can be used:

Sunset Dates Beyond Expected Completion

The sunset date, not the advertised completion estimate, is the realistic outer limit for finance planning. Off-the-plan contracts usually list an expected completion window and a later sunset date, and the gap between them can be a year or more.

A teacher who plans savings, leave and borrowing capacity around the earlier estimate may find settlement arriving at a far less convenient time.

State Limits on Developer Rescission

In New South Wales (NSW) and Victoria, a developer cannot end an off-the-plan residential contract under a sunset clause without notice and either the buyer’s written consent or a court order.

Section 66ZS of the Conveyancing Act 1919 (NSW) requires at least 28 days’ written notice explaining why the developer proposes to rescind and why the sunset event has not occurred. The developer can then rescind only with the buyer’s written consent or a Supreme Court order finding rescission just and equitable. Section 10B of the Sale of Land Act 1962 (Vic) follows a similar structure, with 28 days’ written notice and either consent or a court order.

Queensland apartments sit outside those consent rules. Reforms to the Land Sales Act 1984 (Qld), which commenced on 22 November 2023, limit sunset clause terminations for off-the-plan land. According to the Queensland Government, they exclude community titles schemes, which cover most apartments and townhouses. Those contracts fall under the Body Corporate and Community Management Act 1997 (Qld), which lets a buyer terminate if the scheme is not established within the period the contract sets, up to 5.5 years after signing, or within 3.5 years where no period is stated. The Queensland Government has flagged a review of whether wider sunset protections should extend to apartments.

Rules in other states and territories differ again, and a conveyancer can confirm which regime applies to a particular contract.

Construction Delays After Exchange

A construction delay usually pushes settlement into a different lending environment instead of ending the contract.

Interest rates, lender policy, government scheme settings and your own circumstances may all look different six or 12 months later than planned. Each announced delay is a natural point to recheck borrowing capacity.

Deposit Refunds After Rescission

A deposit is generally refunded when a contract is rescinded under a sunset clause, because in most cases it has been held in a trust account for the life of the contract. How interest on the deposit is treated depends on the contract terms.

A refund returns the money, but not the time. Prices for comparable apartments may have moved during the build, which can leave a teacher back in the market facing a higher entry price.

Price Variation Requests From Developers

A developer seeking a higher price may ask you to sign a varied contract. Agreeing changes your loan amount, your deposit percentage and possibly your eligibility for price-capped schemes.

The sunset clause reforms were designed to stop developers ending contracts after prices rose and then reselling the same apartment for more. In states that require buyer consent, a request to vary the price may be the more likely route, and its finance effect can be tested alongside legal guidance on the notice itself.

Which Changes in a Teacher’s Circumstances Can Affect Re-Approval?

Any change to your position between exchange and settlement can affect re-approval, because the lender assesses you as you stand at formal approval. The changes that come up most often for teachers are:

Parental Leave

Lenders generally assess a teacher on parental leave using the income they will return to, supported by a confirmed return date and the role and hours they are returning to.

Timing still matters. Settlement during paid leave, during unpaid leave or just after a part-time return can each be treated differently. Lenders assessing home loans during unpaid leave often also look for savings that cover repayments until you are back at work.

Reduced Hours

A permanent teacher who returns at 0.6 full-time equivalent (FTE) is typically assessed on 0.6 FTE income, not the full-time salary used when the contract was signed. For a loan sized on full-time pay, that reduction may be the largest single change to borrowing capacity.

Modelling the part-time figure well before settlement shows whether the planned loan still fits, or whether a larger cash contribution or a guarantor may be needed.

Employment Status Change

Lenders assess the employment status you hold at formal approval, so a change during the build can make approval easier or harder. A contract teacher who becomes permanent may find approval smoother. A permanent teacher who resigns to move interstate, takes a fixed-term role elsewhere or moves to casual relief work while studying may find it harder.

School or System Transfer

Changing schools during the build does not usually prevent approval, because continuity of employment in education generally counts in your favour.

A move to another school, another sector or another state department can still show up as a new employer or a new start date. Teachers moving schools before applying may be asked for a probation period to pass or for a letter confirming continuous service.

Pay Increase

Pay increases during the build may lift borrowing capacity, with lenders generally using the new rate once it appears on payslips. Incremental step progression and new enterprise agreements may both count.

Lenders usually assess teacher pay increases separately from any back pay lump sum, which is typically treated as a one-off amount.

Investment Use

Deciding to rent the apartment out changes the loan from owner-occupied to investment, which can change pricing, serviceability and scheme eligibility. This decision may follow a regional or interstate posting accepted during the build.

Lenders usually count only part of the expected rent, and schemes built around owner-occupation, including the Australian Government 5% Deposit Scheme, would generally no longer apply. Lenders treat that switch in different ways, and an investment loan broker can compare pricing and rental assessment across them before settlement.

New Debt

Every new debt taken on during the build may reduce what a lender approves at settlement. Lenders generally count credit card limits, not balances, so an unused card may still reduce borrowing capacity. Car loans and buy now pay later accounts add to assessed commitments too.

Higher Education Loan Program (HELP) debt also stays in the assessment, subject to each lender’s approach. New debt is one of the few settlement risks that sits entirely within the buyer’s control.

Which Lending Settings Can Change Before Settlement?

Several settings outside your control are applied only at formal approval, so they can shift between exchange and settlement. Size, density and postcode rules also shape apartment lending in Sydney and other capital cities, with some lenders capping the loan-to-value ratio (LVR) on small or high-density units. The settings most relevant to an off-the-plan buyer are:

Assessment Rate

Banks test borrowers at the actual loan rate plus a serviceability buffer of three percentage points. The Australian Prudential Regulation Authority (APRA) most recently confirmed that setting on 28 May 2026 and has said it will adjust its settings if needed, so the buffer could differ by the time a 2027 or 2028 settlement arrives.

A 0.5 percentage point rise in the actual rate lifts the assessment rate by the same amount. That close link between buffer settings and borrowing power is why a rate rise during the build can reduce the loan available at settlement.

Debt-to-Income Limits

An off-the-plan apartment may fall outside APRA’s debt-to-income (DTI) limit.

From February 2026, APRA has limited banks and other authorised deposit-taking institutions to writing no more than 20% of new owner-occupier lending, and separately 20% of new investor lending, at a DTI ratio of six times or more. APRA’s information paper on the limit states that loans for the purchase or construction of new dwellings are exempt, although smaller banks may choose not to apply that exemption. The limit applies to each bank’s overall lending, not to each borrower, so individual lenders continue to apply their own DTI policies.

Strata Levies

Strata levies at formal approval may be higher than the developer’s original estimate.

Before completion, levies are based on an initial budget prepared on the developer’s behalf. Owners may reset them at the first annual general meeting, sometimes upward, to reflect real insurance, maintenance and capital works costs, and that meeting can fall shortly before or after settlement. Lenders count levies as an ongoing expense, so higher strata fees reduce the income available to service the loan.

5% Deposit Scheme Rules

Off-the-plan apartments are eligible for the Australian Government 5% Deposit Scheme, but eligibility is generally confirmed near settlement, not at exchange.

According to Housing Australia, the scheme was rebranded from the Home Guarantee Scheme on 1 October 2025 and now has no income caps or waitlists. It allows eligible first home buyers to purchase with a 5% deposit and no lenders mortgage insurance (LMI), provided the price sits within the location’s price cap. Scheme rules generally require buyers to move in within six months of settlement and to keep living there while the guarantee applies.

Participating lenders assess 5% deposit home loans against the price caps and scheme rules in force when the loan is written, so changes made during the build can work for or against you.

Why Do Off-the-Plan Valuations Fall Short of the Contract Price?

Off-the-plan valuations fall short when the market at completion does not support the price agreed years earlier. Lenders generally lend against the lower of the contract price or the valuation, so any gap becomes cash the buyer has to find. Several features of buying off the plan make that gap more likely:

Contract Price Set Years Before Valuation

The contract price reflects the market on the day you signed, while the valuation reflects the market at completion.

If local apartment values rise during the build, the gap may close or reverse. If they flatten or fall, the valuation may come in below the price, even though nothing is wrong with the apartment itself.

Resales Clustered Around Completion

Valuations can come in lower when many apartments in the same building settle and relist at once. Dozens or even hundreds of units may settle within weeks of each other, and some investors list theirs for resale straight away.

Valuers then see many similar apartments for sale in one building, sometimes below the original prices, and may lean conservative as a result.

Incentives Built Into the Contract Price

Incentives such as rebates, furniture packages, stamp duty contributions and rental guarantees can lift a contract price above what the apartment would fetch without them. Valuers generally assess the apartment without those extras, so the more generous the incentive, the greater the risk of a gap at completion.

Loan-to-Value Ratio Pushed Up by a Low Valuation

A low valuation raises your LVR, which is the loan amount as a percentage of the property’s value.

Crossing 80% commonly triggers LMI. Above around 95%, many lenders may decline the loan altogether, depending on their policy for new apartments.

Shortfall Worked Through on a $650,000 Apartment

A $50,000 drop in valuation on a $650,000 apartment can create a $45,000 cash gap at 90% LVR.

In this example, a teacher signs for a $650,000 apartment and pays a $65,000 deposit, planning to borrow the remaining $585,000 at 90% LVR. At completion, the valuer assesses the apartment at $600,000. The lender now works from $600,000, so at 90% LVR the maximum loan becomes $540,000. The teacher would need an extra $45,000 in cash, on top of any stamp duty and settlement costs.

At 95% LVR, a lender willing to go that far could lend $570,000. That reduces the cash gap to $15,000 but adds an LMI premium. These figures are illustrative only, and real outcomes depend on the lender, its LVR limits and the buyer’s circumstances.

Which Options Can Cover a Valuation Shortfall?

A shortfall can be covered only by reducing the gap or funding it from another source, and each route has its own cost and conditions. The routes buyers commonly use are:

Cash Contribution

A cash contribution at settlement is the most direct way to close a shortfall. Teachers who keep saving through the build, instead of treating the deposit as the finish line, have more room to absorb a gap.

Gifted Funds

A gift from family, paid into your account before settlement, can close a shortfall without adding security to the loan. Lenders usually want a signed declaration confirming the money is non-repayable, and policies on gifted funds at higher LVRs vary.

Lenders Mortgage Insurance

LMI can allow a larger loan when a shortfall pushes the LVR above 80%, though it protects the lender, not the borrower. The premium can often be added to the loan, subject to overall LVR limits.

Some lenders offer LMI waivers for eligible professions, depending on income, LVR and property type. Availability for new apartments may be narrower than for houses.

Family Guarantee

A family guarantee can cover a shortfall without cash by using equity in a relative’s property as extra security. It may also reduce or remove LMI.

The guarantor takes on real risk, so independent legal guidance for them is standard practice. A guarantor home loan broker can explain how lenders structure the guarantee and how it may later be released.

Valuation Review

Asking for a valuation review may lift the figure if the valuer missed relevant sales or features, but it does not always succeed. Lenders that accept review requests usually want comparable sales evidence, and some will not order a second valuation at all.

Alternative Lender

Lenders use different valuation panels and limits for new apartments, so a different lender may value the apartment higher or accept a higher LVR.

A specialist mortgage broker for teachers can compare those panels and limits before an application is lodged. Applying with a new lender takes time, which is one reason re-approval work starts early.

Developer Negotiation

Developers sometimes agree to a price adjustment or a settlement extension when valuations across a building come in low, but they have no obligation to do so. The contract price remains binding unless it is varied in writing.

LVR limits, LMI rules, gift policies and valuation review policies differ between lenders and change over time, so these options are a general guide only.

Which Re-Approval Milestones Come Before Settlement?

Re-approval work typically starts about a year before expected completion, because the time allowed to settle after notice on off-the-plan contracts can be short. The usual milestones are:

Borrowing Capacity Check

A fresh borrowing capacity check about 12 months before completion shows whether the original plan still holds. It is also the stage to map known changes, such as planned parental leave, a school transfer or a contract end date, against the expected completion window.

Recent resales in nearby new buildings can hint at whether a valuation gap is likely, and 12 months still leaves time to build extra savings.

Document Refresh

About six months out, documents are refreshed and any changes are flagged with the broker or lender. Lenders commonly ask for the following documents:

• Recent payslips showing current hours and pay rate.
• Employment contract or letter confirming role and status.
• Savings and deposit account statements.
• Credit card and loan statements.
• Return-to-work confirmation for anyone on leave.
• Signed contract of sale and any variations.

The exact list varies by lender and circumstances, so this is a general guide.

Formal Application

Formal application is typically lodged about three months before completion, depending on how far ahead each lender will assess an off-the-plan loan. Some lenders order the valuation once the building is near completion, while others wait until the occupancy certificate is issued. Lodging early leaves room to change lenders if a valuation or policy issue appears.

Occupancy Certificate

The occupancy certificate confirms the building can be lived in, and the valuation is often completed around this stage. Buyers usually attend a pre-settlement inspection soon after.

Strata Plan Registration

Registration of the strata plan creates the individual title and usually triggers the developer’s notice to complete. From this point, the lender can take the new title as security, so formal approval needs to be in place.

Settlement Notice

The notice to complete gives a fixed period to settle, set by the contract and typically measured in weeks. That window is usually too short to start a loan application from scratch. Missing the settlement date may lead to penalty interest and, eventually, default under the contract, depending on its terms.

Timeframes vary between contracts, lenders and states, so this sequence is a general guide only.

Certainty Your Loan Survives the Build

The worry behind most off-the-plan questions is whether the loan will still be there, at the amount you need, when the building finishes. For a teacher, the answer usually depends less on luck than on timing. Leave dates, hours, savings and the likely valuation can all be mapped against the completion window long before a notice to complete arrives.

Knowing where your borrowing capacity is likely to land, and how much buffer a lower valuation might call for, turns a two-year wait into a plan with checkpoints. Settlement then arrives as the last step in that plan instead of a test you are hoping to pass.

If you are weighing up an off-the-plan apartment and want clarity on how your teaching income may be assessed at completion, the team at Education Home Loans can talk you through the options that suit your circumstances.

Frequently Asked Questions (FAQs)

1. What happens if I cannot settle because my loan is declined?

The contract generally still binds you. If settlement does not happen by the required date, the developer may issue a notice to complete, and after that it may terminate the contract and keep the deposit.

Depending on the contract, the developer may also claim losses, such as the shortfall if the apartment later resells for less than your price.

Options at that stage may include a different lender, a family guarantee or an extension negotiated with the developer. A conveyancer or solicitor can explain your rights under the specific contract.

2. Can I change lenders between signing and settlement?

Yes. No loan exists until formal approval, so you can apply with any lender at settlement, including one other than the lender that gave pre-approval. Some off-the-plan buyers change lenders at this point, because lender policies on new apartments, valuations and pricing may have shifted during the build.

We compare options across a panel of lenders, and in most cases our service is paid by the lender.

3. Can I use the First Home Super Saver Scheme for an off-the-plan purchase?

The First Home Super Saver (FHSS) Scheme can be used for an off-the-plan purchase, but the timing needs care. The Australian Taxation Office (ATO) requires a determination before settlement.

For determinations made on or after 15 September 2024, the ATO states that a release request made after signing must generally be lodged within 90 days of signing, and that it must be notified of the contract within 90 days. On an off-the-plan contract, that can mean released funds arrive long before settlement.

ATO guidance addresses off-the-plan contracts directly, and checking it before signing may avoid an unexpected tax outcome.

4. When is a first home owner grant paid on an off-the-plan apartment?

It depends on the state. In NSW, Revenue NSW administers the First Home Owner Grant (New Homes) of $10,000, which applies to new homes, including off-the-plan purchases, priced up to $600,000.

Applications are usually lodged through the lender when arranging finance, and the grant is typically paid at settlement, not at exchange, so it generally cannot fund the deposit.

Other states set different amounts, caps and payment points for first home buyer grants, and many apply only to new homes below set price limits.

5. What happens to my deposit if the developer goes into administration?

Deposits on off-the-plan contracts are generally held in a trust account, not by the developer, which may offer a level of protection if the developer fails.

Whether the project continues under an administrator or a new developer, or the contract ends, depends on the circumstances. A deposit bond works differently, since no cash changed hands. Legal guidance on the specific contract and project is usually the first step once administration is announced.

6. Does a pre-settlement inspection affect my loan?

It can. The inspection lets you check the apartment against the contract and note defects before settlement. If the apartment is visibly incomplete, the valuer may record that, and the lender may delay funding until the work is finished.

Minor defects are usually handled through the developer’s defects process after settlement and do not normally affect the loan.

7. Is a developer’s finance offer worth considering if my bank values lower?

A developer’s finance offer can work, but the rate, fees and terms deserve the same scrutiny as any other loan. An introduced lender still carries out its own assessment.

Comparing the offer against loans from other lenders shows whether it suits your circumstances.

This article is general information only. It does not take into account your objectives, financial situation or needs. You may wish to speak with a qualified professional before acting on any of it.