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Off The Plan Home Loan

Many investors choose to put down a deposit on a unit or townhouse before a single brick has even been laid.

These ‘off the plan’ purchases are a popular choice because the investor will often get a significant discount below the market value and the property may appreciate in value before settlement occurs.

How much can you borrow?

  • First home buyer: 95% of the property value (restrictions apply).
  • Investor: 95% of the property value.
  • Low doc: 80% of the property value.
  • Discounts: Competitive professional package and basic loan discounts are available.

Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will help you to get your mortgage approved.

Don’t forget to read our tips on buying off the plan!

When can I apply for my mortgage?

More than 18 months until settlement?

You cannot apply for your mortgage if settlement is over 18 months away. If you cannot get approval then you may default on your contract and lose your deposit on the property.

You should only consider this option if you’re in a strong financial position, you’re borrowing less than 80% of the property value and you’ve obtained independent legal and financial advice.

3 – 18 months until settlement?

Most lenders can issue a pre-approval at the time you sign the contract, however, by the time settlement comes around they will want to reassess your loan application in full.

If your situation or the lending criteria has changed then you risk being declined and possibly losing your deposit.

One of our lenders can issue a formal approval if there is less than 18 months until settlement. This gives you the confidence to enter into the purchase contract knowing that your finance is secure.

The lender will complete a valuation based on the plans provided by the developer.

Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will help you to get approved.

Less than 3 months until settlement?

When the building is close to completion you can apply for formal approval with most lenders. Some lenders will require the building to be complete before they order a bank valuation.

The lender will ask for a certificate of occupancy prior to settlement, which is typically issued by the developer two weeks before settlement is due.

Valuation or purchase price?

With a normal purchase, banks tend to use the lesser of the purchase price or valuation when determining how much you can borrow.

However, with an off the plan purchase it isn’t uncommon for more than 12 months or even several years to have passed between when the price was agreed and when the settlement occurs.

Because of this, some banks will use the market value rather than the purchase price when assessing your loan to value ratio (LVR), lenders mortgage insurance (LMI) premium (if applicable) and final loan amount.

Can I get multiple valuations?

Some people choose to get valuations from multiple lenders and then apply with the lender that has the highest valuation.

This can allow them to borrow more money or reduce the LMI premium they would pay.

In theory, this works just fine, but in practice most lenders require you to apply for a loan before they will do a valuation.

If you apply with multiple lenders then you are almost certain to fail the credit score of the lenders due to having too many enquiries on your file.

However, some lenders can allow you to order a valuation prior to submitting a loan application.

Call us on 1300 889 743 or complete our free assessment form and we can help you to order valuations prior to applying for a loan so that you can maximise the amount that you can borrow.

Why are the banks so conservative?

Banks tend to be more conservative with off the plan sales because, in some cases, properties are sold for more than they’re worth and the bank valuers have failed to notice the discrepancy.

Although you may make a small fortune from your investment, the bank is only concerned about their risk.

As a result, many banks tend to limit their mortgage loans to 80% of the property value.

By using a mortgage broker, you can find a lender that is willing to take a common sense approach to your off the plan purchase.

Am I paying too much for my property?

We know some people who’ve been sold overpriced off the plan properties by sophisticated marketing companies.

Whilst we cannot give you investment advice, we strongly recommend that you do your own research into the location, the reputation of the developer and the value of the property before you sign the contract of sale.

In particular, you should look at comparable properties that have been sold in the last six months that are not in the same development that you’re buying in.

You can refer to our how to value a property page for more information.

Apply for an off the plan mortgage

Do you need help to get your home loan approved?

Please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will help you to choose a suitable lender and loan product.

  • Riley

    By when the repayments for off the plan loan gets started? I’ve already signed the loan docs for a loan application in Westpac however the title is yet to be registered and the registration is expected to be completed only after a couple of months.

  • Hi Riley,

    The repayments will start only once the settlement of the loan is completed, in chosen periods such as monthly, fortnightly or weekly. The settlement will be completed once the title gets registered and the loan documents will be certified, also the lender will ask for a certificate of occupancy before the settlement. Usually, the certificate is issued by the developer only 2 weeks prior to the settlement.

  • audrey

    I can’t provide my full financials so I might have to go low doc with this. I do have a high income though and not many current commitments so my borrowing power should be okay. Can your brokers help?

  • Hello audrey,

    Yes, we can definitely look into your application and help you to choose a suitable lender and loan product. If we can’t help then we can still point you towards someone else who may be able to. Please call 1300 889 743 to discuss this with one of our expert mortgage brokers.

  • bella

    Is it more expensive if I want to apply with a non-bank lender to finance an off the plan purchase?

  • Hey bella,

    This is not necessarily the case. Even after with these policy changes announced by APRA, there isn’t normally a large difference in the interest rates offered by banks as opposed to non-bank lenders. In fact, a non-ADI can sometimes offer an overall investment loan package that’s a lot more competitive than anything the banks can do.