Updated 4 November 2026
Off the Plan Potential Problem #4: Finance Issues
Explore CM Lawyers’ off-the-plan purchase service for advice about finance conditions and settlement obligations.
A purchase that looks affordable at exchange may be difficult to fund when construction finishes. The useful questions are what the lender has actually approved, what the contract requires and what happens if the two no longer match. Early checks can expose gaps while there is still time to consider realistic options.
Why is off-the-plan finance vulnerable to change?
There can be a long gap between agreeing to buy and having to pay the balance. During that time, your income, expenses, debts, lending criteria and the property’s valuation may change. The purchase contract and the loan application are separate arrangements, so a financing setback does not automatically cancel the purchase.
The NSW off-the-plan guide recommends considering whether finance will remain available when completion occurs. Ask the lender how it assesses this type of property and what can change before settlement, rather than relying on a general borrowing calculator.
Does pre-approval mean the money is guaranteed?
No. Pre-approval indicates potential borrowing capacity based on an assessment and conditions; it is not a promise that funds will be available at settlement. It may expire during construction. Final approval usually requires further assessment of your circumstances and the particular property, so read the approval letter carefully.
NSW Government guidance expressly distinguishes conditional approval from final assessment. Record the expiry date, outstanding requirements and any restrictions on the development. Ask what happens if completion is earlier or later than expected, and keep written responses.
What should you ask a lender or mortgage broker?
Ask about the proposed loan amount, valuation basis, expiry dates, required documents, property restrictions, fees and time needed to complete the process. Confirm what remains conditional and whether changes to your employment, liabilities or the project must be reported. A broker’s positive indication is not the lender’s final commitment.
MoneySmart’s broker guidance recommends checking authorisation, available lenders, fees and reasons for a recommendation. My practical advice is to ask what could prevent the loan from settling, not only how much you might be able to borrow.
Does the sale contract automatically contain a finance condition?
No. Do not assume a NSW sale is conditional on obtaining a loan simply because the seller knows you need one. Any finance condition must be identified in the actual contract. Before exchange, ask your solicitor whether appropriate protection can be negotiated and what happens if the seller refuses it.
A useful review examines the required amount, approval deadline, evidence, notice requirements and consequences of non-approval. A clause that expires shortly after exchange may provide little help with a funding problem arising much later at completion.
How must an express finance condition be used?
Follow its exact wording, deadlines and notice requirements. Keep records of applications, information supplied and lender responses. Do not assume that one informal refusal, an unanswered application or a change of mind satisfies the condition. Obtain advice before stating that finance is approved, waiving protection or attempting to terminate.
Some clauses require particular steps or efforts to obtain finance. Conditions can also interact with extensions and other obligations. The Meehan decision illustrates why the clause’s construction matters; it does not supply missing wording for a different contract.
What does Meehan v Jones demonstrate?
In Meehan v Jones [1982] HCA 52, the High Court considered a Queensland land contract containing an express condition about satisfactory finance. The Court rejected the argument that the condition made the contract void for uncertainty. It allowed the buyer’s appeal and ordered specific performance of the contract.
The transaction concerned land with an oil refinery, not a NSW apartment development. Before the deadline, the buyer’s nominee gave notice that it had arranged finance on satisfactory terms, and the High Court ordered specific performance. The vendors’ attempt to avoid the contract therefore failed; this was not a ruling that every buyer without finance could recover a deposit.
The practical lesson is to negotiate and understand the condition before relying on it. The reasons examine the buyer’s satisfaction and the contractual language, rather than creating a general cancellation right. Current NSW statutory protections and the wording of your own agreement require separate advice.
Can cooling off help resolve an early finance concern?
Residential off-the-plan contracts generally provide ten business days to cool off, unless protection has been validly waived or an exception applies. Withdrawal during that period ordinarily costs 0.25% of the purchase price. It can provide time for advice, but it cannot guarantee financing for a development completed years later.
Ask your solicitor to confirm the deadline and the effect of any section 66W certificate. The Registrar General explains off-the-plan protections. A request for more time is not an extension unless the necessary agreement has actually been made.
How does a low valuation affect the loan?
A lender may offer less than expected if its valuation is below the contract price, even where your income remains unchanged. Identify the difference between the settlement money required and the loan actually available. Lending policies vary, so obtain the lender’s calculation rather than assuming it will finance a fixed percentage.
Include duty, legal fees, adjustments and loan costs in the funding schedule. An agent’s price estimate or valuation prepared for another purpose may not be accepted by your lender. Ask whether factual errors can be reviewed, without assuming a different result.
What personal changes can affect approval?
Reduced income, changed employment, additional debts, higher expenses or credit-report problems can affect a lender’s assessment. Give accurate, current information and ask how a proposed financial change would affect your application. Avoid relying on income or rental projections that cannot be verified or assuming an earlier assessment remains unchanged.
MoneySmart’s loan-rejection guidance identifies common assessment concerns. Check your credit report for errors and retain evidence of income and commitments. Never conceal a new liability to preserve an approval; the settlement plan must reflect the real financial position.
Does a deposit bond solve a funding shortfall?
No. A deposit bond or bank guarantee may replace a cash deposit if the seller agrees, but it does not provide the purchase money needed at completion. Check its expiry, renewal requirements and what happens if a claim is made. The obligations under that instrument are separate from the home loan.
The NSW guide says agreement should be obtained before signing. Cash deposits and instalments under qualifying off-the-plan contracts must remain with the stakeholder during the contract period. That safeguard does not mean a defaulting buyer is entitled to their money back.
Can family money or another loan bridge the gap?
Possibly, but obtain advice about affordability, security and the lender’s requirements before committing. A family contribution may be a gift, loan or ownership arrangement, with different consequences. New borrowing can itself reduce repayment capacity. A guarantor can face substantial liability, so family assistance should not be treated as risk-free money.
MoneySmart explains guarantee risks. Document the arrangement and disclose it accurately to the lender. The person helping should obtain independent advice where appropriate, particularly if their home is security or repayment expectations could later become disputed.
What if the lender refuses finance near settlement?
Tell your solicitor and broker immediately, obtain the lender’s reasons where available and establish the exact contractual deadline. Assess any remaining finance condition or other legal right, a realistic alternative application and whether the seller will agree to an extension. A refusal does not itself suspend your obligation to complete.
Avoid making numerous speculative applications without understanding the problem; MoneySmart warns that repeated applications affect credit records. Any extension should record the new date and financial consequences. Do not promise funding that has not been confirmed.
Could you lose more than the deposit?
Yes. A validly enforced default can expose a buyer to the deposit, additional damages, interest and legal costs, depending on the contract and proven loss. There is no general rule excusing further liability because an economic downturn or lending-policy change was unexpected. Seek urgent advice about any notice received.
Check enforceability, notice requirements and the seller’s steps to reduce loss. Paying a smaller initial deposit does not necessarily cap liability at that payment. Equally, no particular deposit percentage or damages figure should be assumed without reviewing the terms and circumstances.
Can a complaint force the lender to fund the purchase?
Not automatically. You may complain about lender or broker conduct through internal dispute resolution and, where eligible, the Australian Financial Complaints Authority. The available remedy depends on the complaint and jurisdiction. Do not assume a complaint reverses a credit decision or pauses the separate deadline owed to the property seller.
Legal Aid NSW explains financial-dispute pathways. Preserve approval letters, applications and correspondence while your solicitor manages the purchase deadline. If repayments on existing debts are becoming difficult, discuss hardship assistance separately; it does not guarantee a new loan.
What should you prepare for a legal finance review?
Bring the complete sale contract, disclosure statement, approval letters, deposit evidence, funding schedule and any completion notices to CM Lawyers’ off-the-plan service. We can check contractual rights and proposed variations while your lender or broker confirms funding. Budget for purchase costs as well as the unpaid price.
Check Revenue NSW’s duty deadline; an off-the-plan deferral has specific eligibility conditions. I would resolve uncertainties before giving away contractual protections. Contact CM Lawyers on (02) 9557 9000 or lawyers@cmlaw.com.au for advice.
General information for NSW readers, current at 4 November 2026. Obtain advice about your contract, lending arrangements and circumstances.
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