Avoid These 5 Mistakes When Buying Off-the-Plan

Buying off-the-plan means signing a contract for a property that hasn't been built yet.

You choose a design, pay a deposit, and settle months or years later when construction is finished. For first home buyers in Indooroopilly, this can mean access to modern apartments near the shopping centre and train station, or new townhouses closer to the river. It also means your pre-approval can expire before settlement, your savings can fall short when the property revalues lower than expected, and your eligibility for government concessions can change if the rules shift between contract and completion.

Understanding how lenders assess off-the-plan purchases, how deposit structures work across multiple stages, and which concessions still apply at settlement is what separates a workable purchase from one that unravels weeks before you're due to move in.

Mistake 1: Assuming Your Pre-Approval Will Still Be Valid at Settlement

Pre-approval typically lasts between three and six months. Off-the-plan settlement can be 12 to 24 months away. Your income, employment, credit profile and borrowing capacity all need to meet lending criteria again when the property is ready, not just when you sign the contract.

Consider a buyer who secured pre-approval in early 2026 for a two-bedroom apartment in an Indooroopilly development due to settle in mid-2027. They changed jobs six months after signing the contract. At settlement, the new lender required three months of payslips in the new role before formal approval could be issued. Settlement was delayed by eight weeks while the buyer stabilised their employment history and reapplied. The developer charged penalty interest during the delay.

To avoid this, notify your broker as soon as any employment, income or credit situation changes. Reconfirm your borrowing capacity at least three months before the expected settlement date. Lenders will require an updated valuation and full credit assessment at settlement regardless of how strong your original pre-approval was.

Mistake 2: Paying Only the Initial Deposit Without Planning for Stage Payments

Most off-the-plan contracts require a 10% deposit, often split across multiple stages as construction progresses. The first payment might be 5% at contract exchange, with the remaining 5% due when the slab is poured or the frame is up. If your savings are tied up in the first payment and you haven't planned for the second, you can default on the contract before the property is even half-built.

In our experience, buyers often calculate their deposit based on the contract price but forget that each stage payment is a separate cash requirement. If you've used a genuine savings amount to cover the first 5%, you'll need another 5% in accessible funds within a few months, and those funds still need to meet your lender's guidelines on how long they've been held and where they came from.

Some developers allow the deposit to be held in a trust account and released in stages, but this doesn't remove your obligation to have the full amount available when each stage is called. If you're relying on the Australian Government 5% Deposit Scheme, confirm with your participating lender whether stage payments are covered under the guarantee or whether you'll need to fund the gap yourself until final settlement.

Mistake 3: Not Confirming the Property Will Value at Contract Price When It's Finished

Your lender will order a valuation at settlement, not at contract signing. If the completed property values below the contract price, the lender will only provide a loan based on the lower figure. You'll need to cover the difference in cash or renegotiate the sale price with the developer.

Indooroopilly has seen strong demand for apartments within walking distance of the Indooroopilly Shopping Centre and the train line to the city, but valuation outcomes depend on what comparable sales exist at the time of settlement, not what the market looked like when you signed. If several similar developments complete around the same time, valuations can compress.

A buyer purchasing a one-bedroom apartment off-the-plan near Moggill Road agreed to a contract price reflecting the suburb's median at the time of sale. Eighteen months later, when the building was finished, three other developments in the same precinct had also settled. The bank's valuer used those recent sales as comparables, and the property valued 8% below contract price. The buyer had to find an additional amount in cash to settle, which wasn't part of their original budget.

Before signing, ask the developer or selling agent whether other similar developments are scheduled to complete in the same timeframe. Request a copy of the valuation method the developer used to set the sale price. At settlement, if the property values low, you can request a second valuation through your lender or negotiate a price adjustment with the developer, but neither outcome is certain.

Mistake 4: Assuming Stamp Duty Concessions Will Apply the Same Way They Do for Established Homes

Queensland's first home new home concession removes transfer duty entirely on new homes with no price cap, but only if you meet eligibility conditions at the date of settlement, not the date you signed the contract. If your circumstances change during construction, such as moving in with a partner who previously owned property, you can lose access to the concession even though you were eligible when you committed to the purchase.

For contracts signed on or after 1 August 2026, at least one applicant must be an Australian citizen, permanent resident or specified foreign retiree. If you signed before that date under different eligibility rules, the rules in place at settlement will apply when the duty is calculated, not the rules at contract exchange. This can create unexpected costs if legislation changes between signing and completion.

Stamp duty is assessed on the higher of the contract price or the market value at settlement. If the property increases in value during construction, you may pay duty on the appreciated amount, not the amount you agreed to pay. Confirm with the Queensland Revenue Office or your conveyancer which valuation method will apply and whether any announced changes to concession thresholds will affect your purchase before you settle.

Lenders Mortgage Insurance and How It's Calculated on a Contract Price vs Settlement Price

Lenders Mortgage Insurance is charged when your deposit is below 20% of the property value. For off-the-plan purchases, LMI is calculated at settlement based on the lender's valuation at that time, not the contract price. If the property values higher than expected, your LMI can increase. If it values lower, you might avoid LMI altogether but face a shortfall in your loan amount.

Under the Australian Government 5% Deposit Scheme, eligible buyers do not pay LMI because Housing Australia guarantees the difference between the buyer's deposit and 20% of the property value. In Queensland, the price cap for capital city and regional centres is $1,000,000. Both the purchase price and the lender's assessed value must fall at or below that cap for the guarantee to apply. If your contract price is $980,000 but the property values at $1,020,000 at settlement, you will no longer be eligible for the scheme and will need to pay LMI or increase your deposit to 20%.

If you're purchasing outside the scheme, ask your broker to estimate LMI at both the contract price and a range of potential settlement values so you can budget for variation. Some lenders allow you to capitalise LMI into the loan, but this increases your total borrowing and may push you over your approved limit if the valuation comes in high.

Mistake 5: Not Structuring Your Loan to Match How You'll Use the Property After Settlement

Off-the-plan buyers sometimes apply for an owner-occupier loan with the intention of living in the property, but then decide to rent it out or move elsewhere before settlement. If you don't live in the property as your principal place of residence within the required timeframe, you can be required to repay first home buyer grants and concessions, and your lender may require you to refinance to an investment loan at a higher rate.

Queensland's first home new home concession and the $15,000 first home owner grant both require you to occupy the property as your principal place of residence. If your circumstances change and you no longer intend to live in the property, notify your broker and your conveyancer before settlement. You may need to forgo the concessions, pay standard stamp duty, and apply for an investment loan instead. Trying to claim the concessions and then rent the property out without disclosing the change can result in penalties and repayment demands from the Queensland Revenue Office.

When structuring your loan, consider whether you want the flexibility to convert to an investment loan later without refinancing. Some lenders allow you to switch the loan purpose after a minimum occupancy period, while others require a full refinance with new application fees and valuation costs. If you're purchasing a property that could work as either your home or an investment, discuss your medium-term plans with your broker so the loan structure supports both options.

If your situation or your timeline has already changed, call one of our team or book an appointment at a time that works for you. We work with first home buyers across Indooroopilly and can help you structure your finance to match the property you're purchasing and the timing that applies to your settlement.

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