5 essentials when purchasing off the plan

August 01, 2016
Grace Cumbers

Buying property "off the plan" is when you purchase property prior to the building being completed, or even before construction has even begun. It’s an excellent way to lock in a purchase price, whilst you save additional funds during the construction of your new property.

Sometimes, there may even be savings seen on stamp duty, as it may be levied on the value of the property at the time of purchase, which is often less than what you would pay if the building was complete.

Additionally, you could see savings in your tax, as depreciation claims are generally more bountiful than those seen on existing dwellings.

Other beneficial factors that may come into play when purchasing off the plan could include purchasing in states where First Home Owner Grants are given or stamp duty exemptions may be made.

Here are 5 essential strategies to integrate into your off the plan property hunt

Research, research, research

Before agreeing to a contract of sale on a property, ensure you have thoroughly investigated the proposed property and its developer. Be fully aware of differences in your property to the display suite. Have a look at some completed projects by the same builder. Know what fittings and fixtures are included in the sale contract. Do some research into other unit prices, rental returns and strata levies in the surrounding area to ensure your property has been fairly priced and is affordable.

Secure a good solicitor

Buying property off the plan can mean that the contract contains a range of clauses that are different than if you were purchasing an existing dwelling. They may allow the developer to change aspects of design, the final sale price or completion date of the build. This is why it is crucial to have your solicitor to review the contract so that any issues that could affect your payments or property can be highlighted. Be aware of:

Sunset clauses: A sunset date is a date set, where if the property is not been built yet, you and or the developer can pull out of the contract. These can work in favour of yourself or the developer.

Changes to original designs: ensuring any changes to designs are made clear, whether they are regarding the size of the car space, area of the rooms, or brand or quality of the fittings.

Know your deposit

Purchasing off the plan property usually requires you to make a deposit of 10% of the purchase price. Some developers may ask for a bank guarantee, others may be happy with a cash deposit or a deposit bond. Our brokers in Woolloomooloo can assist you through organising your deposit and payment process. They can liaise with your solicitor to have you ready for settlement on the exact date required.

Secure pre-approval for your loan

Securing pre-approval of your loan allows you peace of mind that once your settlement comes around your loan will be ready to go. Our brokers in Woolloomooloo can assist you to calculate your borrowing power, and find the right product for you from a wide range of lenders. Once you have chosen a home loan, we can do the work to arrange loan pre-approval.  

Finalise your loan

6 weeks prior to settlement, your broker will lodge a full home loan application to help you move to unconditional loan approval. The lender will value the property, and occasionally the valuation may come back short. In this case you have three options.

You may show your lender you have sufficient funds to cover the shortfall and allow them to lend you the rest.

You can ask to compare valuations with other lenders; there could possibly be a higher valuation with another lender.

Thirdly, you may use equity from another property that you own, or have a family member implement a guarantor on your loan with their own property equity.

Once the loan documents are signed and returned to the lender, your broker will liaise with both the lender and solicitor in relation to the settlement. Then, all that’s left for you is to celebrate completion of your new home or investment!


Investing in off the plan property has many positives, and risk factors may arise in many situations. Your finished property could turn out different to what you had expected, or for property values could rise or fall during the period of construction. Enrol in one of our property investment seminars to learn how to minimise risks like this when choosing off the plan property. 


What’s your experience with off the plan properties been like? Let others join the conversation and share your thoughts.

Posted in: Property investment

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