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There are many various methods to purchase a home, and one of them is by purchasing a home off the plan.

Purchasing a home off the plan is not the same as bidding on an existing home at an auction and entering in the front door. Building one instead could be a valid method, so let’s have a look at how that works.

What does it mean to purchase off the plan?

When you buy a property that hasn’t even been built yet, it’s known as a ‘off the plan’ transaction. All you need is a building blueprint, so you’re buying ‘off the plan’ without even putting a shovel in the ground. After you’ve purchased the land, you’ll need to finance the property’s development and wait for it to be ready to live in, which can take a long time.

What about buying an established home?

Purchasing an existing home is the more usual option these days, and it entails just purchasing an existing property, as the name implies. This is a convenient option because you can move in faster and there are fewer potential issues when construction, which can also give you a more exact pricing estimate without any surprises.

Buying an established home, on the other hand, has the disadvantage of the house not being properly adapted to your needs, but rather to the wants of the person who built it initially. These homes may also be more popular, making them more difficult to come by, and those in more desirable areas may be prohibitively pricey.

Buying off the plan: Pros and cons

Buying off the plan provides some advantages, but it also has some drawbacks. Many of the disadvantages do not apply to established residences, although some of the advantages (mostly the cash grants) do.


  • You may be eligible for government grants: By building a home from the ground up, you may be eligible for a variety of government awards. The First Home Owners Grant (FHOG), and the First Home Guarantee which offer varied (by state) cash concessions and exemptions to help first home buyers with the excessive costs of building a home. These are to name a few of the many grants and concessions available for first home buyers.
  • You may be eligible for stamp duty exemptions: You can also save money on stamp duty, which might be a significant outlay otherwise. This varies by state, but if the property is under a particular value, stamp duty can be completely waived, and Victoria also has a ‘off the plan’ concession. These could help you save tens of thousands of dollars.
  • Developers may provide concessions: Some developers may offer you lower prices or a financial grant/discount if you build your home with them, but you should read the terms and conditions carefully.
  • You can save money while it’s being built: You won’t have to renovate or repair anything with a brand new build.
  • There’s possibility for capital growth: Some builders only require a 10% investment up front and let you to pay the balance later. Even while it’s being built, the property’s worth could rise!


  • Building a house may be tough and time-consuming: a lot can go wrong, and things like bad weather might cause delays in the construction process, preventing you from moving in until later. Purchasing a pre-existing property is less difficult.
  • Estimated construction expenses aren’t always correct: Whether anything goes wrong, as described above, or the developers add more expenditures, the home can easily cost tens of thousands of dollars more than you anticipated.
  • There are additional chances that things could go wrong: A shoddy construction could end up costing you a lot of money in the long run. Furthermore, the construction may never be completed. You should get refunded your deposit, but it’s still a waste of time.
  • Financing the construction is more difficult: As we’ll see below, financing for off-the-plan homes are a little more complicated than standard home loans.
  • The property’s value may drop: It can gain in value while being built, but it can also decline in value. In the time it took to develop, prices in the neighbourhood could drop by several percent, and a lower value could raise your loan-to-value ratio (LVR), resulting in additional penalties.

How do I buy off the plan?

Although you must conduct extensive research when purchasing an existing house, adding construction to the mix adds additional processes. As a result, you must ensure that you perform the following.

  • Find a decent area to buy in: Just like when buying an existing home, you’ll want to look for an area with unoccupied property that has strong liveability as well as future capital growth potential.
  • Consider the property you want: Now, think about the type of home you want to create. Houses, apartments, townhouses, and other structures all have advantages and disadvantages, and you may be limited in what you may build depending on your location.
  • Have blueprints set up: Unless you’re a professional architect, hire someone to draw out a building plan for you based on your specifications. Keep a copy of any finished plans for later.
  • Locate a developer: You’ll need to contact a developer to have the property built for you. You’ll also need to preserve a copy of the construction contract. These developers should provide you with a precise cost estimate.
  • Carefully read the contract: Once the developer has given you a contract, carefully read it, paying attention to the deposit requirements, whether your chosen plan is included, their defect policy, the cooling-off period, and so on. You can hire a conveyance to handle this for you.
  • Look for grants: As previously indicated, building a home can provide you with tens of thousands of dollars in state and federal financial grants and discounts, as well as some from the developers themselves.
  • Last but not least, you’ll need money to pay for both the land and the property.

What are your options for financing your off-the-plan purchase?

While some lenders may allow you to utilise a traditional home loan, you’re more likely to succeed with a construction loan or a vacant land loan. Unlike a typical loan, a construction loan covers all of your expenses as they arise during the construction process, rather than just the principal and interest.

For instance, you’ll only have to pay interest on what you pay for each step of building separately:

  • The slab or base
  • The frame
  • The external walls, windows and doors
  • The internal fit-out
  • The completion of the property

Before providing you financing, most lenders will ask you to submit them with property drawings as well as a written contract with the builders. But after you’ve been accepted, it’s time to get to work!

On average, construction loans have higher interest rates, however Homestar Finance offers competitive rates that are cheaper than most other lenders. Find out if you’re pre-qualified for a Homestar Finance home loan now!


Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.