Proven tips to secure finance for off-the-plan purchases

Off-the-plan purchases introduce settlement delays that can span 12 to 36 months, during which your income documentation, lender policy, and the property's assessed value can all shift.

The buyer most affected by these variables is a self-employed company director purchasing in Sydney's high-density precincts, where deposit structures, valuation shortfalls, and income verification at settlement create funding challenges that don't arise with established property. You need to understand how lenders assess your application at contract, how they reassess at settlement, and what conditions must remain satisfied across that period.

How lenders assess self-employed income at contract versus settlement

Lenders issue home loan pre-approval based on your current financials, but that approval typically expires within 90 days. For off-the-plan purchases with extended settlement periods, the lender reassesses your serviceability closer to completion using updated tax returns and financial statements. If your taxable income has declined between contract and settlement, or if you've changed your company structure or dividend strategy, the lender may reduce your approved loan amount or withdraw the offer entirely. Consider a buyer who contracts in early 2026 using two years of tax returns showing consistent director income of $180,000. Settlement occurs in mid-2028, but the buyer reduced their salary in the 2027 financial year to reinvest profit into the business. At settlement, the lender recalculates serviceability using the lower figure and approves only $650,000 instead of the original $800,000, leaving a $150,000 shortfall the buyer must fund from savings or alternative finance.

To reduce this risk, maintain stable and documented income throughout the construction period. If you plan to adjust your remuneration structure, consult your accountant and mortgage broker before making changes. Some buyers choose to delay profit retention strategies until after settlement, accepting a higher short-term tax liability to preserve loan approval. Lenders assess self-employed applicants using one to two years of tax returns, company financials, and ATO portal data. The reassessment at settlement applies the same serviceability buffer, currently 3.0 percentage points above the loan product rate under APRA policy, to your updated income. If rates have risen or your income has dropped, your borrowing capacity contracts accordingly.

Sunset clauses and how they affect your deposit if the project fails

A sunset clause allows the developer to rescind the contract if the project is not completed by a specified date, typically two to three years from the contract date. If the developer exercises the sunset clause, your deposit is returned, but you lose the opportunity cost of that capital, any duty paid at contract in jurisdictions where duty is payable upfront, and potential market gains if property values have risen. In active markets like Sydney's inner-city and Parramatta precincts, buyers who contracted in 2024 and experienced sunset clause terminations in 2026 saw median values rise by 15 to 20 per cent during the same period, meaning they re-entered the market needing significantly larger deposits for equivalent properties.

If you're purchasing in a high-density corridor such as Green Square, Waterloo, or the Harbour CBD fringe, review the sunset date carefully and confirm the developer's track record for on-time delivery. Developers in these areas have faced delays due to labour shortages, supply chain disruptions, and local council approval timeframes. Contracts with shorter sunset periods, particularly those under 24 months, carry higher risk of rescission unless the developer has a demonstrated history of meeting deadlines. Some buyers negotiate an extension of the sunset date at contract or include a clause requiring developer consent before rescission, though developers are rarely willing to accept such terms in markets with strong presales.

Valuation shortfalls at settlement and how to structure your deposit to manage them

Valuation shortfall occurs when the lender's valuer assesses the completed property at a lower figure than the purchase price. The lender will only advance a loan based on the lower valuation, leaving you to fund the difference. In a scenario where a buyer contracts to purchase a two-bedroom apartment in Zetland for $950,000 with a 10 per cent deposit and 90 per cent loan-to-value ratio, but the property values at $880,000 at settlement, the lender approves a loan of $792,000 instead of $855,000. The buyer must find an additional $63,000 at settlement or renegotiate the purchase price with the developer, which is uncommon.

To manage this risk, structure your deposit to retain a buffer beyond the contractual minimum. Instead of paying exactly 10 per cent at contract, consider holding 15 to 20 per cent in accessible savings or offset accounts linked to existing loans. This does not increase the deposit paid to the developer, but it ensures liquidity if a valuation shortfall emerges. Valuation risk is higher in precincts with rapid supply increases, including Sydney Olympic Park, Homebush, and parts of Macquarie Park, where apartment completions have outpaced demand in recent cycles. Lenders use comparable sales data from the three to six months prior to settlement, so a surge in new listings or price corrections in your building or neighbouring developments will directly affect your valuation outcome. If you're purchasing in a building where more than 30 per cent of presales are from offshore buyers, valuation and settlement risk both increase, as foreign investment restrictions introduced from 1 April 2025 reduce the pool of potential buyers and resale liquidity.

Fixed rate lock periods and why they rarely align with off-the-plan settlements

Fixed rate home loans are locked at application and held for 90 days in most cases. Off-the-plan settlements extend well beyond this period, meaning you will be offered a new fixed rate closer to completion based on the market at that time. If rates have risen, your repayments increase. If rates have fallen, you benefit. You cannot lock a fixed rate at contract and expect it to remain available two years later. Variable rates are set at settlement and reflect the lender's standard pricing at that time. In our experience, buyers who assume their pre-approved fixed rate will carry through to settlement often face repricing that affects affordability at the final serviceability assessment.

If rate certainty is a priority, consider a split loan structure at settlement that combines a portion of fixed rate debt with a variable portion linked to an offset account. This allows partial rate protection while maintaining flexibility to deposit surplus income and reduce interest over time. Some lenders allow you to indicate a preference for a fixed rate at pre-approval, but the actual rate and availability are confirmed only when you are within 90 days of settlement and the lender issues formal loan documents.

The 10 per cent deposit rule and how it applies under the Australian Government 5% Deposit Scheme

Most off-the-plan contracts require a 10 per cent deposit, paid in stages, with an initial amount due at exchange and the balance within 90 days. The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5 per cent deposit, with Housing Australia guaranteeing up to 15 per cent of the property value to the lender. The scheme applies to off-the-plan purchases provided the property price is within the applicable cap, which for Sydney is $1,500,000 in capital city and regional centre areas and $800,000 in other areas. The 5 per cent deposit under the scheme refers to the amount required by the lender to settle the loan, not the amount required by the developer at contract. You still need to meet the developer's contractual deposit terms, which are typically 10 per cent, but you can use the scheme to reduce the total cash deposit required at settlement by accessing a higher loan-to-value ratio without paying lenders mortgage insurance. The scheme cannot be combined with Help to Buy, though it can generally be used alongside state stamp duty concessions. In NSW, first home buyers purchasing off-the-plan developments can access a full transfer duty exemption on properties valued up to $800,000 and a concession on properties between $800,001 and $1,000,000, provided the buyer occupies the property as their principal place of residence within 12 months of settlement and remains for at least 12 continuous months.

Why construction delays affect your borrowing capacity even when your income stays stable

Construction delays extend the time between pre-approval and settlement, during which lender policy, interest rates, and APRA serviceability requirements can change. Even if your income remains stable, a rate rise or policy tightening can reduce your approved loan amount when the lender reassesses at settlement. From 1 February 2026, APRA activated debt-to-income lending limits that restrict each lender to advancing no more than 20 per cent of new owner-occupier loans to borrowers with a DTI ratio of six times gross income or greater. If your loan amount relative to your income sits near this threshold, and the lender has already allocated its quarterly DTI capacity to other borrowers by the time your settlement is due, your application may be declined or deferred even though it was pre-approved months earlier. This is more common for self-employed buyers whose income documentation shows variability or who rely on dividend income that fluctuates year to year. Lenders treat company director income differently depending on ownership structure, and if your share of distributable profit has declined or if the company has reinvested earnings rather than distributing them, your assessed income at settlement may fall below the level used at pre-approval.

If your off-the-plan purchase is delayed beyond the original settlement estimate, contact your broker as soon as you're notified. You may need to provide updated financials ahead of the formal reassessment to confirm your loan remains within policy, or you may need to increase your deposit to bring the loan amount within the lender's revised appetite.

How to choose between variable, fixed, and split loan structures at settlement

Your loan structure decision is made at settlement, not at contract. Variable rates allow full offset capability and unlimited additional repayments without penalty, which suits buyers who plan to deposit surplus business income or dividend payments throughout the year. Fixed rates provide repayment certainty but limit offset functionality and restrict additional repayments to a capped amount, often $10,000 to $30,000 per year depending on the lender. A split structure allocates a portion of the loan to each rate type, allowing partial protection from rate rises while maintaining access to offset benefits on the variable portion. For a self-employed buyer with irregular income, a split weighted toward variable debt with a linked offset account allows you to deposit profit distributions as they occur and reduce interest in real time, while the fixed portion stabilises a portion of your repayment obligation. The exact split depends on your cash flow pattern, your risk tolerance for rate movement, and your intention to make lump sum repayments. We regularly see buyers choose a 50/50 split at settlement, then adjust the ratio at the next fixed rate expiry based on their offset balance and repayment behaviour over the initial period.

Your broker can model different splits using your projected income and expenses to identify the structure that minimises interest cost over the first five years. The choice should account for your after-tax income, your capacity to maintain an offset balance, and the likelihood of rate changes during the fixed period. Fixed rates are priced based on wholesale swap rates and lender funding costs at the time of settlement, so the differential between fixed and variable rates will depend on market conditions when your loan is drawn.

Call one of our team or book an appointment at a time that works for you. We work with self-employed buyers across Sydney's off-the-plan market and structure finance that holds through construction and settlement, with contingency planning for valuation and income reassessment built into the process from contract through to drawdown.

Frequently Asked Questions