What Makes Off-the-Plan Different for First Home Buyers
You're committing to a property that doesn't exist yet, and the finance you arrange today won't settle for 12 to 24 months. That gap creates timing risks most established property purchases don't have. Your income, deposit, and the lender's policy can all change between contract signing and settlement. If your circumstances shift or your lender changes their criteria, you might not be able to settle when the developer calls the loan due.
Consider a buyer who signs a contract in Geelong's Mercer precinct for an apartment priced at $520,000 with a 10% deposit. They arrange pre-approval with a participating lender under the Australian Government 5% Deposit Scheme, planning to use only 5% at settlement. Eighteen months later, they've changed jobs twice and their income documentation no longer satisfies the original lender's serviceability test. The property reaches practical completion and the developer issues a settlement notice. The buyer now has 14 days to secure finance or risk losing their deposit and facing legal action for breach of contract.
The key difference is that pre-approval for an off-the-plan purchase isn't a binding commitment from the lender. It's an indication based on today's policy and your current situation. Settlement happens in the future, and the lender reassesses everything at that point.
How First Home Buyer Stamp Duty Concessions Work on Off-the-Plan Contracts
Victoria offers a full stamp duty exemption on properties valued up to $600,000 and a concession on homes between $600,001 and $750,000 for first home buyers. Off-the-plan buyers also access a separate concession where duty is calculated on the land value at the contract date, not the completed property value at settlement. Both concessions can apply to the same transaction if you meet the eligibility criteria.
For a two-bedroom apartment in Geelong's Rippleside area contracted at $580,000, the land value component at contract might be assessed at $180,000. Under the off-the-plan concession, duty is calculated only on that $180,000 figure. Because the total contract price is under $600,000 and you're a first home buyer who will occupy the property, the first home buyer duty exemption reduces the payable duty to nil. Without the first home buyer exemption, you'd still benefit from duty being calculated on $180,000 rather than $580,000, but you'd pay duty on that land value portion.
The off-the-plan concession in Victoria applies to contracts signed on or before 31 October 2026 for properties not yet titled or substantially completed. If you're signing a contract after that date, confirm with your conveyancer whether the concession remains available or has been extended.
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When Pre-Approval Expires Before Settlement
Most lenders issue pre-approval valid for 90 days. Some extend this to six months. Off-the-plan settlements occur 12 to 36 months after contract signing. Your pre-approval will expire well before settlement, and you'll need to reapply closer to the completion date.
The risk is that lending policy tightens in the intervening period. Serviceability buffers might increase, meaning the amount you qualified to borrow 18 months ago is no longer available. LMI pricing might rise. The lender might withdraw from certain postcodes or apartment developments if they're concerned about oversupply. Even if your income and deposit haven't changed, the loan you were pre-approved for might not be available at settlement.
Some buyers assume that because they have a signed contract, the lender is obligated to proceed. That's not correct. The contract is between you and the developer. The lender reassesses your application at settlement using current policy. If you no longer meet their criteria, they can decline to lend.
To reduce this risk, maintain stable employment, avoid taking on new debt, and keep your deposit funds quarantined in an offset or savings account where the lender can verify the balance. Around six months before the expected completion date, request an updated pre-approval so you're not scrambling in the final weeks before settlement.
The 5% Deposit Scheme and How It Applies to Off-the-Plan
The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying LMI. The scheme applies to both established and off-the-plan properties, provided the purchase price and assessed value are at or below the relevant regional cap.
For Geelong, the cap is $950,000 as a designated regional centre. Both the contract price and the lender's valuation at settlement must fall within that limit. If you sign a contract at $900,000 but the lender values the completed property at $960,000, you won't be eligible for the scheme at settlement. The valuation is conducted closer to practical completion, not at contract signing, so there's valuation risk on any off-the-plan purchase where prices are rising.
Applications are made through a participating lender, not directly through Housing Australia. Each lender on the panel has different credit policies, loan features, and interest rate structures. Some lenders on the scheme don't offer offset accounts. Others restrict split loan structures or have higher variable rates than non-panel lenders. Choosing a lender solely because they're on the scheme can mean giving up features or paying more over the life of the loan.
You can use the scheme alongside Victoria's first home buyer stamp duty concessions and the $10,000 First Home Owner Grant for new homes valued up to $750,000. For an off-the-plan apartment in Geelong contracted at $680,000, you'd access the stamp duty concession, qualify for the FHOG, and use the 5% deposit scheme to avoid LMI. Your upfront costs would be the 5% deposit, conveyancing and settlement fees, and any contributions to the owners corporation establishment fund.
What Happens If the Developer Delays Completion
Most off-the-plan contracts include a sunset clause, which is a longstop date by which the developer must reach practical completion. If the developer doesn't meet that date, either party can usually rescind the contract. If you rescind, you're entitled to a refund of your deposit. If the developer rescinds, the same applies.
Delays are common. Supply chain disruptions, council approval delays, and builder insolvency can all push completion dates out by six months or more. If the delay pushes settlement beyond your pre-approval validity, you'll need to reapply. If interest rates have risen significantly and your borrowing capacity has reduced, you might no longer qualify for the loan amount you need.
Some buyers welcome a delay if property values have fallen since contract signing, as it gives them an opportunity to exit the contract without penalty and renegotiate or walk away. Others face difficulties if they've sold an existing property, given notice to a landlord, or made financial commitments based on the original completion date.
If the developer offers an early settlement incentive, assess whether you're genuinely ready to settle or whether the incentive is being offered because the developer needs to convert presales into settled stock for their own financing purposes. Early settlement might mean you take possession of a property in a building site with incomplete common areas, no landscaping, and restricted access.
Choosing Between a Fixed Rate and Variable Rate Before Settlement
You generally lock in your interest rate structure within 90 days of settlement, not at contract signing. This means you're making the fixed versus variable decision much closer to settlement, when you have more visibility over the rate environment.
Some buyers assume they should fix their rate as soon as they sign the contract to protect against future rate rises. That's not how off-the-plan finance works. Lenders won't lock in a fixed rate 18 months in advance. You'll make that decision once the developer provides a settlement date and you've reconfirmed your home loan application closer to practical completion.
If variable rates are lower than fixed rates at the time you lock in your loan, and you want the flexibility of an offset account, a variable structure might be the right fit. If you prefer repayment certainty and fixed rates are attractive, you can lock in a one, two, or three-year fixed term. Some buyers split their loan, fixing a portion for rate certainty and keeping a portion variable with an offset to manage cash flow and make extra repayments without restriction.
The advantage of waiting until closer to settlement is that you're making the decision with current information, not trying to predict the rate environment 18 months out.
How the First Home Owner Grant Applies to New Apartments
Victoria's First Home Owner Grant provides $10,000 for new homes valued up to $750,000. The grant applies to apartments, townhouses, and houses, provided the property is classified as new. Off-the-plan purchases are new by definition, so you'll qualify if the contract price is within the cap and you meet the residency requirements.
You must move into the property within 12 months of settlement and live there as your principal place of residence for at least 12 continuous months. If you purchase an off-the-plan apartment intending to rent it out for the first year after settlement, you won't qualify for the grant. The occupancy requirement is strict, and the State Revenue Office can audit your compliance and demand repayment if you don't meet the condition.
The grant is paid at settlement, and most buyers use it to reduce the cash they need to bring to settlement or to cover immediate costs like removalists, utility connections, and furniture. It doesn't reduce the amount you need to borrow unless you choose to put it toward the purchase price, which is uncommon.
For Geelong buyers, the combination of the $10,000 FHOG, the stamp duty concession, and access to the 5% deposit scheme makes off-the-plan apartments one of the most accessible entry points into the property market, particularly in developments close to the waterfront, Geelong train station, or the hospital precinct where public transport and employment options are concentrated.
What to Confirm with Your Conveyancer Before You Sign
Your conveyancer should review the contract before you sign, not after. Off-the-plan contracts are often heavily weighted in favour of the developer, with clauses that allow the developer to change the floor plan, materials, or finishes without your consent. Some contracts allow the developer to substitute specified appliances or finishes with items of "similar quality," which is subjective and difficult to enforce.
Confirm whether the contract includes a sunset clause and whether that date is realistic given the current stage of construction. Check whether the deposit is held in a trust account or released to the developer on signing. If the deposit is released and the developer becomes insolvent before completion, you're an unsecured creditor and might not recover your funds.
Ask whether the contract allows the developer to on-sell your apartment to another buyer if you're unable to settle. Some contracts include this clause, and if the developer on-sells at a lower price than your contract price, you're liable for the difference plus the developer's costs.
Your conveyancer should also confirm what concessions and grants you're eligible for, the timing requirements for each, and whether any concessions require you to hold the property for a minimum period before selling. Victoria's first home buyer concessions require 12 months of continuous occupancy. If you sell before that period, you'll need to repay the concession.
Call one of our team or book an appointment at a time that works for you. We'll work through your off-the-plan contract, confirm your eligibility for the 5% deposit scheme and state concessions, and structure a home loan that still fits your situation when settlement arrives.
Frequently Asked Questions
Can I use the 5% deposit scheme to buy an off-the-plan apartment in Geelong?
Yes, the Australian Government 5% Deposit Scheme applies to off-the-plan properties in Geelong, provided the contract price and lender's valuation at settlement are both at or below the $950,000 regional cap. You apply through a participating lender, not directly through Housing Australia.
What happens if my pre-approval expires before the off-the-plan property is finished?
You'll need to reapply for finance closer to the settlement date using the lender's current policy. If lending criteria have tightened or your circumstances have changed, you might not qualify for the same loan amount, which could prevent you from settling.
Do I pay stamp duty on the final property value or the contract price for off-the-plan purchases in Victoria?
Victoria's off-the-plan concession calculates duty on the land value at contract date, not the completed property value at settlement. If you're also a first home buyer, you may qualify for a full duty exemption on properties up to $600,000 or a concession up to $750,000.
Can I get the First Home Owner Grant if I buy an off-the-plan apartment in Geelong?
Yes, Victoria's $10,000 First Home Owner Grant applies to new apartments valued up to $750,000. You must move in within 12 months of settlement and live there as your principal residence for at least 12 continuous months.
When do I lock in my interest rate for an off-the-plan purchase?
You typically lock in your interest rate structure within 90 days of settlement, not when you sign the contract. This means you make the fixed versus variable decision closer to practical completion when you have current rate information.
