Why Should Dubbo Investors Plan Off-the-Plan Finance Early?

An off-the-plan purchase is a finance decision as much as a property decision. The lender looks at your numbers when you apply, and again close to settlement, and a lot can shift in between.

As a broker team in Dubbo, we see how timing affects regional investors. Here is how to set up an off-the-plan investment loan so settlement day doesn't catch you short.

How Does Finance Work for an Off-the-Plan Investment Property?

You usually sign a contract and pay a deposit, then settle once the building is finished. Your lender assesses you at application, and may check your position again before settlement. Ask your lender what it re-checks.

That gap can be long. Your income, debts, living costs and the lender's policy can all change while you wait. Pre-approval is a useful first step, but it is not a final guarantee of lending, and it can lapse before the building is complete. Ask us how long a lender's pre-approval lasts and what happens if it expires before the building is ready.

Because the property doesn't exist yet, the lender also relies on a valuation at settlement. Lenders set their own policies on this, so we check them before you sign anything.

What If the Valuation Comes in Below the Contract Price?

If the valuation is lower than your contract price, the lender lends against the lower figure, and you cover the difference from your own funds. This is one of the main risks of buying off the plan.

As a hypothetical example, consider a buyer who signs a contract planning to borrow 80% of the price to avoid Lenders Mortgage Insurance (LMI). At settlement the valuation is lower than expected. The lender calculates the loan to value ratio (LVR) on the lower valuation, so the maximum loan at 80% drops. The buyer is now short by the gap between the two figures. If they have kept a cash buffer, they can use it to cover the shortfall and settle without needing LMI or a last-minute scramble.

The lesson is to hold savings beyond your deposit. Keeping that buffer has a cost, because the money isn't working elsewhere. It is still cheaper than a failed settlement, which can put your deposit at risk.

Why Does Interest Only vs Principal and Interest Matter Here?

An interest only loan lowers your repayments for a set period, but it does not increase how much you can borrow. Lenders assess you as if you will be paying principal and interest over the shorter remaining term.

The main trade-off is that you don't reduce the loan balance during the interest only period. You also face higher repayments when it ends.

As an illustration at 6.75% p.a., a $600,000 loan costs $3,375 a month in interest only (6.75% x $600,000 / 12). With principal and interest over 30 years, the repayment is about $3,891 a month. If you took five years interest only, the later repayment would be calculated over 25 years, which comes to about $4,145 a month. These figures are illustrative only. You can test your own numbers with our borrowing capacity calculator.

Interest is generally deductible on a rental property loan. The principal part of a repayment is not. Speak with your accountant about how this applies to you.

How Do the Negative Gearing Changes Affect Off-the-Plan Buyers?

For properties acquired after 7:30pm AEST on 12 May 2026, the rules depend on whether the dwelling is an eligible new build. Eligible new builds can continue to deduct rental losses against all income.

From the 2027-28 income year, net rental losses on established residential properties bought after that time can only be used against other residential property income. Eligible new builds include dwellings constructed on previously vacant land, and dwellings that replace existing properties where the number of dwellings increases. Whether a particular off-the-plan apartment or townhouse qualifies is a question for your accountant, so check before you sign.

Also keep in mind that a loss only exists if the rent falls short of your costs. Losing money to claim a deduction is not a strategy on its own. Your accountant can tell you how your situation is likely to play out.

What Costs Can Sit Alongside Your Repayments?

Off-the-plan apartments and townhouses in a strata complex usually carry a body corporate levy. This is an ongoing cost that reduces your net rental income.

Lenders also count only part of your expected rent when assessing you. APRA's guidance says prudent lenders apply a minimum 20% haircut, so no more than 80% of expected rent is counted. A rental appraisal for a building that isn't finished is also treated with more caution than actual rent received. Each lender sets its own rules on what evidence it accepts, so we match your application to a lender whose policy suits the purchase.

Stamp duty is another upfront cost. Check the current NSW position and any concessions for your purchase before committing. Our team can point you to the right information.

Why Use a Dubbo Broker for an Investment Loan?

A local broker can compare investment loan options across a panel of banks and lenders, and explain how each lender treats off-the-plan purchases. That matters because policies on valuations, rental income and settlement checks differ from lender to lender.

We know Dubbo and the Central West, and we work with investors who are building a portfolio over time. If you already own a property, we can also look at whether your existing equity could support a deposit. Releasing equity increases your debt and your repayments, so we run the numbers with you first. Our investment loans page explains how we approach this, and if your current loan is due for review, a loan health check is a good place to start.

If you are weighing up construction instead of a finished building, our construction loans service covers that path.

Call one of our team or book an appointment at a time that works for you. We'll walk through your numbers before you sign a contract, so settlement day holds no surprises.

Frequently Asked Questions