Avoid These 5 Mistakes Buying Off-the-Plan in Bentleigh East

Off-the-Plan Purchases Create Long Settlement Windows

Off-the-plan properties settle months or years after you sign the contract, which means your finance approval needs to remain valid or be reissued closer to settlement. Pre-approval typically lasts three to six months, and most off-the-plan developments in Bentleigh East take 12 to 24 months to complete. Lenders reassess your income, credit position and the property value at settlement, not at contract date.

Consider a buyer who secures pre-approval in early stages for an apartment development on Centre Road. They pay the initial deposit, but by the time construction completes 18 months later, they've changed jobs, taken on a car loan, or seen their income drop due to reduced overtime. The lender reassesses and offers a lower borrowing capacity, leaving the buyer scrambling to cover the shortfall or risking contract default.

Lenders use the lower of contract price or settlement valuation when calculating loan amounts. If the market softens or comparable sales decline during construction, the lender may value the property below your contract price, creating a deposit gap you must fund from savings or by seeking alternative lending options.

Deposit Structures Differ From Established Property Purchases

Off-the-plan contracts typically require a 10% deposit paid in stages. You might pay 2% on exchange, 3% after 90 days, and the remaining 5% at later intervals tied to construction milestones. Established property purchases usually require the full deposit at exchange. This staged approach can assist with cash flow planning, but it also means you need to maintain sufficient savings over an extended period.

If you're relying on the First Home Loan Deposit Scheme or other low deposit options, confirm with your lender that staged deposit payments align with program requirements. Some lenders require evidence that all deposit funds are in place before issuing formal approval, even if the contract allows staged payments.

Bentleigh East's proximity to the Bentleigh Club, Patterson Station and Southland Shopping Centre makes it attractive for buyers seeking access to public transport and retail precincts. This demand supports off-the-plan developments in the area, but it also means competition for finance can be high as settlement dates approach. Lock in your lending structure early and revisit it at least three months before the expected completion date.

Sunset Clauses Let Developers Cancel Your Contract

A sunset clause allows either party to rescind the contract if the development isn't completed by a specified date. Developers typically set these dates 24 to 36 months from contract signing. If property values rise significantly during construction, a developer may delay completion to trigger the sunset clause, refund your deposit, and resell units at higher prices.

You cannot rely on the contract proceeding to settlement. If you've sold an existing property, increased your borrowing capacity based on anticipated equity, or locked in a build timeline for family planning, a cancelled contract disrupts all of those plans. In rising markets, developers have stronger incentives to invoke sunset clauses. In falling markets, buyers may consider invoking the clause if the property no longer represents value, but this forfeits your deposit in most cases unless specific contractual protections exist.

Bentleigh East developments near McKinnon Secondary College and the East Bentleigh shopping strip have historically attracted families seeking school zone access. Delays in these projects can force families into temporary rental arrangements or extended commutes if they've already vacated prior housing.

Stamp Duty Is Calculated on Land Value at Contract Date

Victoria's off-the-plan concession applies to strata or community title contracts signed on or before 31 October 2026. Duty is calculated on the land value component only at the date you sign the contract, not on the completed property value at settlement. If you purchase an apartment in a Bentleigh East development with a land value component under the duty threshold, you may pay significantly less stamp duty than you would for an equivalent established apartment.

This concession is not restricted to first home buyers during the eligible period. Buyers who have owned property previously can access the same duty treatment, provided the contract is signed before the concession expires. If you're a first home buyer, you may also qualify for Victoria's first home buyer duty exemption or concession, which applies to properties valued up to $600,000 with a sliding scale to $750,000. These concessions can be layered where applicable, but you must meet residency and occupancy requirements.

If your contract is signed after 31 October 2026, standard duty rates apply based on the full contract price. Timing your contract signing before the cutoff can result in substantial duty savings, particularly on higher-value units.

Lenders Reassess Borrowing Capacity at Settlement

Your income, employment status, credit history and deposit all get reassessed when you apply for final loan approval closer to settlement. Changes in any of these areas can reduce your borrowing capacity or disqualify you from the loan product you were initially approved for. Lenders also revalue the property based on completed comparable sales in the area at settlement.

In a scenario where a buyer contracts to purchase a two-bedroom unit in a development near Centre Road with an expected settlement in 18 months, the lender's initial pre-approval is based on the buyer's income as a full-time retail manager and a clean credit file. Fourteen months later, the buyer reduces their hours to part-time, and their assessable income drops by 30%. At settlement, the lender recalculates and approves only 70% of the original loan amount. The buyer must find an additional sum equivalent to the shortfall or negotiate an extension with the developer, which may not be granted.

Maintain stable employment, avoid taking on new debt, and keep your deposit funds quarantined in an offset account or high-interest savings account during the construction period. If your circumstances change, contact your broker or lender immediately to reassess your position and explore options before settlement becomes imminent.

Final Loan Approval Requires a Completed Valuation

Lenders will not settle your loan until a licensed valuer inspects the completed property and confirms it matches the contract specifications. If the development is delayed, the valuation is delayed. If the completed unit differs from the plan, particularly in size, fit-out quality or strata classification, the valuer may assign a lower value than your contract price.

You should arrange a pre-settlement inspection with your conveyancer or solicitor to identify any defects or incomplete work before the developer requests settlement. If defects exist, you can lodge a dispute and delay settlement until they're rectified, but this requires careful management of your finance approval expiry and any penalty interest clauses in your contract.

Off-the-plan purchases in Bentleigh East often involve apartment or townhouse developments, which rely heavily on comparable sales data at settlement. If similar units in the same development or nearby developments have sold for less than your contract price during construction, expect the lender's valuation to reflect those lower figures. This can trigger the need for additional deposit funds, a switch to a higher LMI tier, or refinancing into a different loan structure post-settlement.

Call one of our team or book an appointment at a time that works for you. We'll review your contract terms, confirm your eligibility for applicable duty concessions and government schemes, and structure your home loan application to account for the extended settlement timeline and valuation risk specific to your development.

Frequently Asked Questions