Buying off-the-plan means signing a contract today for an apartment or townhouse that won't be finished for another 12 to 36 months. Your deposit is structured in stages, your loan isn't drawn until settlement, and the property value at completion might differ from the price you agreed to pay.
For first home buyers in Coogee, off-the-plan purchases open access to stamp duty savings and new home grants that don't apply to established properties. But lenders treat these applications differently because there's no finished property to value at the time you apply.
Why Coogee first home buyers consider off-the-plan apartments
Coogee's established apartment stock sits close to the beach and attracts strong buyer competition. Off-the-plan developments, often located slightly back from the beachfront or on arterial roads like Coogee Bay Road, let you secure a brand new apartment at a fixed price before construction finishes.
Under the Australian Government 5% Deposit Scheme, you can purchase with a 5% deposit and no lenders mortgage insurance. In New South Wales, first home buyers purchasing a new home valued up to $800,000 pay no stamp duty. An established apartment at the same price would attract duty in the thousands.
The deposit for an off-the-plan contract is typically paid in stages: 10% at exchange of contracts, sometimes structured as an initial payment followed by further instalments over several months. The remaining 90% is paid at settlement, which occurs once the development is registered and the property is ready to transfer.
How pre-approval works when the property doesn't exist yet
You need pre-approval before you sign an off-the-plan contract, but the lender can't value a property that hasn't been built.
Lenders issue conditional approval based on the development plans, the contract price, and your financial position. The approval is valid for a set period, often three to six months, but off-the-plan settlements occur 12 months or more after contract exchange. Your pre-approval will expire before settlement, and you'll need to reapply closer to completion.
Banks assess off-the-plan purchases more conservatively than established homes. Some lenders apply loan-to-value ratio restrictions or exclude certain postcodes or developers. Others limit the percentage of their loan book allocated to off-the-plan apartments and stop accepting applications once that threshold is reached.
A broker who works with first home buyers regularly will know which lenders are currently accepting off-the-plan applications in Coogee and which have tightened their criteria. That information changes quarterly, and it's not something you'll find published on a comparison website.
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The valuation gap and how it affects your borrowing
At settlement, the lender orders a valuation of the completed property. If the valuer assesses the apartment at less than the contract price, you have a valuation gap.
Consider a buyer who exchanged contracts on a Coogee apartment for $850,000 in early 2025. At settlement in late 2026, the valuer assesses the completed apartment at $820,000. The buyer's loan was approved at 95% of the contract price, or $807,500. The lender will now only lend 95% of the valuation, which is $779,000. The buyer needs to find an additional $28,500 to settle.
This scenario happens when the market softens, when the development doesn't meet buyer expectations, or when the contract price was set above the realistic market range at the time of sale. You can't predict the valuation outcome 18 months in advance, but you can prepare by saving more than the minimum deposit and confirming your borrowing capacity allows for some reduction in the loan amount if needed.
Some lenders will allow you to take out lenders mortgage insurance to cover a higher loan-to-value ratio if you're short at settlement, but that depends on your income, the property, and the lender's appetite at the time. It's not something you can rely on.
Sunset clauses and what happens if the developer delays completion
Every off-the-plan contract includes a sunset clause, which is the date by which the developer must complete the project and settle the sale. If the developer doesn't meet that date, either party can terminate the contract.
In New South Wales, developers cannot rescind the contract using the sunset clause without the buyer's written consent or a Supreme Court order. Buyers can rescind without penalty if the sunset date passes and the developer hasn't registered the plan.
If the development is delayed and you've been renting while you wait, you're paying rent for longer than expected and your savings might be eroded by living costs. If interest rates or lending criteria have changed significantly between contract exchange and the revised settlement date, you might no longer qualify for the loan amount you were originally pre-approved for.
A development near Coogee Beach originally scheduled to settle in mid-2026 was delayed to early 2027 due to construction hold-ups. Buyers who had locked in pre-approvals in late 2025 had to reapply in late 2026. Some faced higher interest rates and stricter serviceability tests. One buyer's income hadn't changed, but the lender's assessment rate had increased, reducing her maximum borrowing capacity by $40,000. She could still settle, but only because the valuation came in slightly higher than the contract price, giving her a small buffer.
What happens to your deposit if the developer goes into administration
Your deposit is held in a trust account or backed by a deposit bond until settlement. If the developer enters administration before completion, the outcome depends on how the deposit was secured.
In New South Wales, deposits for off-the-plan residential property are usually held on trust by the vendor's solicitor or paid using a deposit bond. If held on trust, the funds should be returned if the contract is terminated due to the developer's insolvency. If a deposit bond was used, you won't be out of pocket because the bond provider covers the amount rather than you paying cash upfront.
Deposit bonds are a common structure for off-the-plan purchases because they let you secure the contract without tying up cash for 18 months. The bond provider charges a fee based on the bond amount and the term. You still need to demonstrate that you have genuine savings equivalent to the deposit amount, and the bond is not a substitute for a home loan application.
If you paid your deposit directly to the developer rather than into trust, and the developer collapses, you're an unsecured creditor and may not recover the full amount. That structure is uncommon for residential property in New South Wales, but you should confirm the deposit arrangement with your solicitor before exchanging contracts.
Fixed rate lock-ins and interest rate exposure during construction
You can't lock in a fixed interest rate at the time you exchange an off-the-plan contract because the loan doesn't start until settlement. Some lenders let you lock a rate 90 days before settlement, but most off-the-plan buyers settle on whatever the current variable or fixed rate is at the time.
If rates rise significantly between contract exchange and settlement, your borrowing capacity at settlement might be lower than it was when you first applied. Lenders assess serviceability using a buffer above the actual interest rate, and that buffer increases when rates are higher.
Variable rates give you access to an offset account, which can reduce interest once you've settled and started making repayments. Fixed rates provide certainty but typically don't include offset functionality. For first home buyers who are still building savings or receive irregular income, an offset account can be more valuable than a fixed rate, particularly in the first few years of the loan.
When settlement occurs and what you need to have ready
Settlement happens once the development is complete, the strata plan is registered, and the local council issues an occupation certificate. You'll receive a settlement notice, usually 14 to 21 days before the scheduled date.
At settlement, you need the balance of the purchase price, adjustment for council rates and strata levies, and your solicitor's fees. Your lender will have reconfirmed your loan and ordered the final valuation. If anything has changed with your employment, income, or credit file since you first applied, the lender may decline to proceed or reduce the loan amount.
Your solicitor will arrange for the funds to be transferred and for the title to be registered in your name. You'll receive the keys once settlement is complete and you can move in. If you're using the NSW first home buyer stamp duty exemption, your solicitor will lodge that at settlement, and no duty is payable on properties valued up to $800,000.
If you're ready to talk through an off-the-plan purchase in Coogee and want to know what your borrowing capacity looks like now and what might change by settlement, call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I use the Australian Government 5% Deposit Scheme to buy off-the-plan in Coogee?
Yes, the scheme applies to off-the-plan purchases in Coogee. You can buy with a 5% deposit and no lenders mortgage insurance, provided the property price and valuation both sit at or below the $1,500,000 cap for New South Wales capital city areas.
What happens if the off-the-plan apartment is valued lower than the contract price at settlement?
The lender will only lend based on the valuation, not the contract price. If there's a gap, you'll need to cover the difference with additional savings or seek lenders mortgage insurance if the lender allows it.
Do I pay stamp duty on an off-the-plan apartment in Coogee if I'm a first home buyer?
No stamp duty applies if the property is valued up to $800,000 under the NSW First Home Buyers Assistance Scheme. A sliding concession applies for properties between $800,001 and $1,000,000.
How long is my pre-approval valid if the off-the-plan apartment won't settle for 18 months?
Pre-approvals are typically valid for three to six months. You'll need to reapply closer to settlement, and the lender will reassess your income, employment, and the completed property before final approval.
What is a deposit bond and should I use one for an off-the-plan purchase?
A deposit bond is a guarantee provided by an insurer that covers your deposit without requiring you to pay cash upfront. It's commonly used for off-the-plan purchases to avoid locking up savings during construction, but you still need to prove you have genuine savings equivalent to the deposit amount.
