Buying Off-the-Plan as a First Home Buyer in Oakleigh

Why Off-the-Plan Purchases Appeal to First Home Buyers in Oakleigh

Off-the-plan properties let you secure a home at current prices while saving additional deposit funds before settlement. Oakleigh's recent apartment developments along Atherton Road and near Oakleigh station have drawn first home buyers who want to enter this established suburb without competing in bidding wars for existing stock.

The appeal centres on deposit structure. Most off-the-plan contracts require a 10% deposit, with settlement occurring 12 to 24 months later. During that period, you can continue saving, work on improving your borrowing capacity, or wait for your income to increase. For buyers using the First Home Loan Deposit Scheme, this timeline allows you to coordinate your application with the property's completion rather than rushing to secure finance for an auction.

Consider a buyer who purchased a two-bedroom apartment off-the-plan in one of the newer buildings near Warrigal Road. At contract signing, they paid $55,000 as a 10% deposit on a $550,000 purchase. Settlement was scheduled 18 months later. During that time, they continued working full-time and saved an additional $20,000, which reduced their loan-to-value ratio and eliminated the need for Lenders Mortgage Insurance when they applied for their home loan six months before settlement.

How Pre-Approval Works When You're Buying Off-the-Plan

Pre-approval for off-the-plan purchases should be obtained around six months before your expected settlement date, not at contract signing. Lenders will assess your current financial position and provide conditional approval, but that approval expires after three to six months depending on the lender.

Your income, employment status, and credit position at settlement matter more than your circumstances at contract signing. If you change jobs, take on additional debt, or experience any credit issues during the construction period, your loan application will need reassessment. We regularly see buyers assume that signing a contract locks in their finance, but lenders reassess everything closer to settlement.

Valuation risk also becomes relevant. Lenders will order a valuation when you apply for finance, typically six months before settlement. If the property values below the contract price, you'll need to cover the shortfall with additional deposit funds. In a scenario where a property contracts for $600,000 but values at $580,000, you need to find an extra $20,000 or renegotiate the contract price with the developer.

First Home Buyer Stamp Duty Concessions and Off-the-Plan Timing

Victoria's first home buyer stamp duty concessions apply based on the contract date, not the settlement date. If you sign an off-the-plan contract while eligible for the concession but lose eligibility before settlement, you still receive the concession you qualified for at signing.

The concession provides full stamp duty exemption on properties valued up to $600,000 and partial concessions on properties between $600,000 and $750,000. This applies to both established and off-the-plan properties. For a first home buyer purchasing a $650,000 apartment off-the-plan in Oakleigh, the partial concession could reduce stamp duty by several thousand dollars compared to purchasing without the concession.

You cannot apply for the First Home Owner Grant on off-the-plan apartments in Oakleigh because the grant only applies to new or substantially renovated homes valued under $750,000 where the land component meets specific criteria. Most off-the-plan apartments in established suburbs don't qualify due to land value restrictions, though you should confirm eligibility based on your specific contract.

Deposit Structures and Low Deposit Options for Off-the-Plan Buyers

Most off-the-plan contracts require a 10% deposit, split into an initial payment at contract signing and a second payment within 30 to 90 days. This staged deposit structure differs from established property purchases where the full deposit is due at contract signing.

If you're relying on a 5% deposit through a low deposit home loan option, you still need to meet the developer's 10% deposit requirement at contract. The remaining 5% typically comes from savings, a family gift deposit, or borrowing from another source. The First Home Loan Deposit Scheme allows eligible buyers to borrow up to 95% of the property value without paying Lenders Mortgage Insurance, but the developer's deposit terms remain unchanged.

In our experience, buyers using this scheme often structure their deposit by contributing their own 5% savings and receiving the additional 5% as a family gift or small personal loan, which is then refinanced into the main home loan at settlement. Lenders assess gift deposits differently than saved deposits, requiring a statutory declaration from the person providing the gift confirming it doesn't need to be repaid.

What Happens If Settlement Delays or Finance Falls Through

Construction delays extend your settlement date and give you more time to save or improve your financial position, but they also extend the period before you can move in. Developers typically provide 14 to 21 days' notice of the new settlement date once construction completes and the occupancy certificate is issued.

If you cannot secure finance approval at settlement, most contracts allow the developer to retain your 10% deposit and pursue you for additional damages. This makes the six-month pre-settlement finance application critical. Applying early gives you time to address any issues with your borrowing capacity or explore alternative lenders if your first choice declines the application.

Some contracts include sunset clauses that allow either party to terminate if settlement hasn't occurred by a specified date, usually 24 to 36 months after contract signing. If the developer triggers the sunset clause, you receive your deposit back. If you trigger it without valid grounds, you may forfeit your deposit. Reading these clauses with a conveyancer before signing protects you from unexpected outcomes.

Comparing Interest Rate Options for Your First Home Loan Application

Fixed interest rate options provide certainty during the time between contract signing and settlement. If you apply for pre-approval with a fixed rate and rates increase before settlement, your approved rate remains locked. If rates decrease, you'll need to decide whether to proceed with the approved rate or reapply at the lower rate, which requires reassessment.

Variable interest rate loans offer offset account features that help you reduce interest once you settle. During the construction period before settlement, you can deposit savings into an offset account linked to your approved loan, though the loan itself doesn't activate until settlement. This feature works well for buyers who continue saving during the 12 to 24 month construction window.

For most first home buyers purchasing off-the-plan in Oakleigh, a split loan structure combining a fixed portion for repayment certainty and a variable portion with an offset account provides flexibility. Your specific situation, income stability, and savings behaviour will determine which structure suits you. We work through these options during the pre-approval process, typically six months before your scheduled settlement.

Call one of our team or book an appointment at a time that works for you to discuss how an off-the-plan purchase fits with your deposit timeline and finance approval strategy.

Frequently Asked Questions