How to Finance an Off-the-Plan Purchase

Off-the-plan finance looks different to standard property settlement because the gap between contract and completion can stretch 12 to 24 months, sometimes longer.

You're signing today but settling years away, and the loan you arrange now needs to account for income changes, rate movements, and lender policy shifts that haven't happened yet. For maxillofacial surgeons working in private practice or hospital settings, that timeline intersects with career progression, practice ownership transitions, and evolving income structures in ways that need addressing upfront.

Why Pre-Approval Timing Matters for Off-the-Plan Contracts

Pre-approval gives you contract certainty, but most lender approvals expire after 90 days. When you sign an off-the-plan contract, you'll need home loan pre-approval that covers the deposit stage, then a fresh application closer to settlement that reflects your current income, the completed property valuation, and the lender's lending criteria at that time. Some lenders will issue conditional approvals that extend beyond the standard window if you're purchasing off-the-plan, but this isn't universal. You need to confirm whether your lender offers extended validity or whether you'll need to reapply entirely when construction finishes.

Deposit Structuring and the 10% Contract Requirement

Most off-the-plan contracts require a 10% deposit, paid in stages. Typically, you'll pay 5% on exchange and the remaining 5% within 90 days, though some developers structure this differently. If you're using genuine savings, those funds need to be verifiable and held in your name for at least three months before application. Surgeons who've recently changed roles or moved into private practice sometimes hold funds across multiple accounts or trusts. Lenders want to see a clear savings history, so consolidating funds early and ensuring they're held in your personal name avoids complications during the application process.

Consider a maxillofacial surgeon purchasing a two-bedroom apartment off-the-plan in an inner-city precinct, with a contract price around the median for new apartments in that location. The deposit is staged, with the first portion due at exchange and the second within three months. The surgeon holds savings partly in a personal account and partly in a practice offset account. The lender requires proof that all deposit funds are genuine savings or equity, so the surgeon transfers the offset funds into a personal account three months before exchange, then provides bank statements showing the combined balance held consistently. This avoids the lender questioning the source or treating part of the deposit as a recent influx rather than established savings.

How Valuations Work When the Property Doesn't Exist Yet

Lenders can't value an incomplete building using a standard desktop or kerbside method. Instead, they rely on an "as if complete" valuation, which estimates what the property will be worth once construction finishes, based on comparable sales, developer plans, and the contract price. If the valuer's "as if complete" figure comes in below your contract price, the lender will calculate your loan amount based on the lower valuation, not what you've agreed to pay. That gap becomes additional equity you need to cover, either from savings or by increasing your deposit.

This happens more often in precincts with high concentrations of off-the-plan stock, where comparable sales data shows price softening between contract signing and settlement. If you're purchasing in an area with multiple developments completing around the same time, ask your broker whether recent valuations in that precinct have aligned with contract prices or come in lower. That gives you a clearer picture of the equity buffer you might need.

Loan Products That Suit Delayed Settlement

You can lock in a fixed interest rate closer to settlement, but fixing a rate two years before you take possession isn't usually viable because rate lock periods don't extend that far. Most surgeons settling off-the-plan start on a variable rate at settlement, then consider fixing once they understand their repayment capacity and the rate environment at that time. Some choose a split loan structure, which lets you fix part of the loan amount while keeping the rest variable, giving you rate certainty on a portion of the debt without locking the entire balance.

An offset account becomes useful once you settle, particularly if you're holding surplus funds from practice income or locum work. The offset reduces interest on the variable portion of your loan by matching your account balance against the outstanding loan amount. If you're planning to use the property as an investment rather than owner-occupied, interest-only repayments during the initial period can improve cash flow, though this depends on your broader tax and investment strategy.

How Sunset Clauses Affect Your Finance Structure

A sunset clause sets the date by which the developer must complete the project, or either party can walk away from the contract. If construction delays push past the sunset date, you can choose to rescind the contract and have your deposit refunded, or negotiate an extension with the developer. From a finance perspective, delays mean your income, employment status, and lending criteria at settlement might differ significantly from when you first applied. If you've transitioned from a salaried hospital role to private practice ownership between contract and settlement, the lender will reassess your income using business financials rather than PAYG statements, which can affect your borrowing capacity and the loan amount you're approved for.

Surgeons purchasing off-the-plan while planning to open or acquire a practice should notify their broker before settlement if their income structure has changed. The lender will require updated financial documentation, and in some cases, you may need to switch lenders if your original lender's policy doesn't accommodate self-employed borrowers within your timeframe.

What Happens If Your Income or Employment Changes Before Settlement

Lenders reassess your application at settlement, which means any changes to your employment, income, or financial position between contract and completion need to be disclosed and supported with current documentation. If you've moved from a public hospital role into private practice, the lender will treat your income differently. PAYG income from a hospital contract is straightforward to verify, but private practice income requires tax returns, profit and loss statements, and sometimes accountant letters confirming your earnings trend. If you've been in practice for less than two years, some lenders will accept a combination of historical PAYG income and recent practice financials, while others require two full years of self-employed income before they'll assess you under their self-employed lending criteria.

If your borrowing capacity at settlement is lower than it was at contract due to income changes, you'll need to either increase your deposit, reduce your loan amount, or find a lender whose policy accommodates your updated circumstances. This is where working with a broker familiar with medical professional lending helps, because lender appetite for recently self-employed surgeons varies widely.

LMI Waivers and How They Apply to Off-the-Plan Purchases

Some lenders offer LMI waivers for medical professionals, including maxillofacial surgeons, which allows you to borrow above 80% of the property value without paying Lenders Mortgage Insurance. These waivers typically apply to established properties, but a smaller number of lenders extend them to off-the-plan purchases if the property meets certain criteria, such as being in a low-rise building or outside a high-density precinct. Not all lenders treat off-the-plan and established properties the same way under their professional loan programs, so confirming waiver eligibility early avoids assuming you'll have access to a benefit that may not apply at settlement.

If the LMI waiver doesn't extend to your off-the-plan purchase, you'll either need to increase your deposit to 20% or pay LMI on the portion of the loan above 80% LVR. LMI is a one-off cost, either paid upfront or capitalised into the loan amount, and it protects the lender if you default, not you as the borrower.

Foreign Investment Rules and FIRB Approval for Off-the-Plan Buyers

If you're a temporary resident or non-citizen purchasing off-the-plan, you'll need Foreign Investment Review Board approval before signing the contract. FIRB approval for new dwellings, which includes off-the-plan apartments and newly constructed properties, is generally more accessible than approval for established properties, but it comes with application fees and processing times that need to be factored into your contract timeline. Most developers are familiar with FIRB requirements and can accommodate extended settlement conditions if approval is pending, but you need to disclose your residency status early so your solicitor can manage the application process alongside your finance approval.

For Australian citizens and permanent residents, FIRB approval isn't required, and there are no restrictions on the type or location of property you can purchase.

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