Can I get a loan before the townhouse is built?

You can get a pre-approval, which Moneysmart says lasts 3 to 6 months and does not commit you to a loan. The funds are needed at settlement, which Moneysmart describes as when the title is transferred into your name, so when the lender makes its final decision depends on the lender. Lender policies differ.

What if the valuation comes in lower than the contract price?

You still owe the contract price, because the NSW Government and Consumer Affairs Victoria say it is fixed at signing. A lower valuation can mean a smaller loan, so the difference has to come from other funds. A lender or broker can say whether a second valuation or a different loan structure is possible.

Will my pre-approval last until settlement?

It may not. Moneysmart puts pre-approval at 3 to 6 months, while Victoria (by default) and Queensland both use 18 months as a marker for off-the-plan completion, and a contract can set its own period. Ask the lender what happens when an approval expires before settlement.

Can I get out of the contract if finance falls through?

Not automatically. A 2017 WA Consumer Protection blog says a buyer who defaults could lose the deposit and may have to pay damages to the developer. Whether your contract has a finance condition is a question for your conveyancer. The cooling-off period is the only no-reason exit, and in WA there is none.

Do interest rate changes affect my contract price?

No. Moneysmart says a variable rate can go up or down at the lender's decision. That changes your repayments, and a lender may take it into account when deciding how much to lend, but the price you agreed is fixed at signing. See what to check in an off the plan contract for clauses that can adjust it.

How does finance work when buying off the plan?

Finance is the part of an off-the-plan purchase that moves most between signing and settlement. You sign now, but the lender's money is needed when the title transfers, which can be many months later, and the approval and valuation that mattered at signing may look different by then. As at October 2026, Moneysmart says a pre-approval lasts 3 to 6 months, while the statutory markers for off-the-plan completion run to 18 months in Victoria (by default) and Queensland.

Checked October 2026. Rules, rates and prices change, so confirm anything that matters with the source linked below.

Pre-approval is not the loan

Moneysmart describes pre-approval as showing you are eligible to apply for a loan up to a certain amount. It says pre-approval does not commit you to a loan and lasts 3 to 6 months. It lists valuation, finance approval and inspections as typical conditions of a conditional offer.

For an off-the-plan buyer this has two effects. First, pre-approval helps set a budget before you sign. Second, it is a different thing from the lender's decision on a specific loan against a specific property near settlement. When that decision is made, and what the lender will reassess, depends on the lender, so it is a question to put to them, not an assumption to carry into the contract.

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The gap between signing and settlement

The contract can run well past an approval's life. Consumer Affairs Victoria says buyers can end the contract and get the deposit back if the plan of subdivision is not registered by the time in the contract, or the default of 18 months. Queensland says a seller of a proposed lot must settle within 18 months. The NSW Government says buyers who need to borrow must be confident they can secure finance when settlement comes, and lists as a question whether you can still arrange finance if the building is finished earlier or later than expected.

Things that can change over that period include your income and expenses, the lender's policies, the rates on offer and the property's value. Consumer Affairs Victoria lists potential problems obtaining finance, for example if the value falls or the completion date changes, among its off-the-plan risks.

Valuation shortfall

Valuation is one of the conditions Moneysmart names for a conditional offer. If a lender's valuation comes in lower than the contract price, the loan may be smaller than you planned, and you cover the difference. The price in the contract does not fall with the valuation: the NSW Government and Consumer Affairs Victoria both say it is fixed at signing.

An illustration, assuming a lender that lends up to 80 per cent of the lower of the contract price and its valuation (lenders set their own policies):

Contract price: $800,000. Deposit of 10 per cent paid at signing: $80,000. Balance due at settlement: $720,000.
Loan at 80 per cent of the $800,000 price: $640,000. Your own money needed in total: $160,000, of which $80,000 is already paid.
Valuation at settlement: $760,000. Loan at 80 per cent of that: $608,000.
Extra cash needed: $640,000 minus $608,000, which is $32,000, on top of the $160,000 planned.

That 80 per cent loan-to-value ratio (the loan divided by the value) is the same line Moneysmart draws when it says a deposit of 20 per cent of the price avoids lenders mortgage insurance, so a low valuation can leave a loan above that line, and whether insurance then applies is a question for the lender.

Deposits, schemes and costs

Moneysmart suggests a savings target of 20 per cent of the price plus buying costs, and notes that first home buyers may be able to use the Australian Government 5 per cent Deposit Scheme. Eligibility, price caps and the interaction with new-home concessions are covered in the state guides, for example first home owner grant for a new home in NSW and the Queensland guide to first home buyers and new townhouses. How the deposit is held while you wait is in off the plan deposits and deposit bonds.

Interest rates in the waiting period

Moneysmart says a variable interest rate can go up or down, and that the lender decides whether and by how much. For off-the-plan buyers the main point is timing: the rate that applies at settlement is not necessarily the one you saw at signing, and a 2017 WA Consumer Protection blog lists interest rate rises, falling property values and loss of employment as things that can affect a buyer's ability to get finance at settlement.

Questions to put to a lender or broker

How long does my approval last, and what happens if settlement falls after it ends?
Do you lend against the contract price or your own valuation, whichever is lower?
When is income and spending reassessed before settlement?
Does a deposit bond count towards my contribution?
Will you value the property at settlement or earlier, and who arranges it?

A broker or lender can answer these for your situation. This guide cannot predict what any lender will do.

The price is locked in at signing but the loan is not. A lower valuation or a longer wait changes the funding, not the contract.

Common questions

Can I get a loan before the townhouse is built?: You can get a pre-approval, which Moneysmart says lasts 3 to 6 months and does not commit you to a loan. The funds are needed at settlement, which Moneysmart describes as when the title is transferred into your name, so when the lender makes its final decision depends on the lender. Lender policies differ.
What if the valuation comes in lower than the contract price?: You still owe the contract price, because the NSW Government and Consumer Affairs Victoria say it is fixed at signing. A lower valuation can mean a smaller loan, so the difference has to come from other funds. A lender or broker can say whether a second valuation or a different loan structure is possible.
Will my pre-approval last until settlement?: It may not. Moneysmart puts pre-approval at 3 to 6 months, while Victoria (by default) and Queensland both use 18 months as a marker for off-the-plan completion, and a contract can set its own period. Ask the lender what happens when an approval expires before settlement.
Can I get out of the contract if finance falls through?: Not automatically. A 2017 WA Consumer Protection blog says a buyer who defaults could lose the deposit and may have to pay damages to the developer. Whether your contract has a finance condition is a question for your conveyancer. The cooling-off period is the only no-reason exit, and in WA there is none.
Do interest rate changes affect my contract price?: No. Moneysmart says a variable rate can go up or down at the lender's decision. That changes your repayments, and a lender may take it into account when deciding how much to lend, but the price you agreed is fixed at signing. See what to check in an off the plan contract for clauses that can adjust it.

Keep reading

Sources

This is general information, not financial, tax or legal advice. Get advice that suits your situation before you buy.