Planning Deposits and Upfront Costs for Off‑the‑Plan Apartments

Buying off-the-plan changes when and how you pay for a property, but the core question stays simple: how much cash do you actually need, and when? In most Australian projects, you’ll pay a 5–10% deposit at exchange, with the balance due at settlement, and you should budget an extra 3–6% of the price for upfront costs like stamp duty, legal fees and loan charges. That deposit can sometimes be partly or wholly covered by a deposit bond instead of cash, but only if you meet strict criteria.

This guide breaks those numbers down with examples so you can decide, this week, whether an off-the-plan apartment fits your cash and borrowing position.

Your contract deposit is only one part of the total funds you’ll need.

1. Quick answer: what deposit and upfront costs you’ll actually need

1.1 Typical deposit requirements for off‑the‑plan

Most Australian off‑the‑plan projects work like this:

• Deposit at exchange: 10% of purchase price is still the most common.
• Variations: some developers offer 5% deposits, or 5% now + 5% later during the build.
• Jumbo or riskier deals: higher deposits (15–20%) are sometimes requested for very expensive units or overseas buyers.

For a $800,000 apartment, a standard contract might require:

• 10% deposit at exchange = $80,000 (cash, deposit bond or bank guarantee)
• 90% (less any rebates) at settlement = $720,000, funded by your loan plus any extra cash you contribute.

1.2 Upfront costs on top of the deposit

Separate to your deposit, you need to budget for:

• Stamp duty (often your biggest cost after the deposit)
• Legal and conveyancing fees
• Loan application and valuation fees
• Lenders Mortgage Insurance (LMI) if you borrow above 80% LVR
• Inspections and reports (pre‑settlement)
• Moving and setup costs (furniture, blinds, internet, etc.)

As a rough planning rule, 3–6% of the price on top of your deposit is usually a realistic starting point, though this varies by state and whether you’re a first‑home buyer or investor.

1.3 Deposit vs lender’s required contribution

Two different “deposit” concepts get mixed up:

1. Contract deposit – what the developer requires at exchange (commonly 10%).
2. Loan deposit / LVR – how much of the property price your lender expects you to contribute at settlement to meet their loan‑to‑value ratio (LVR) rules.

You might only pay 10% to the developer but still need to show a 20% contribution at settlement to avoid LMI with your lender. We’ll tie these two pieces together shortly.

2. How off‑the‑plan deposits actually work

2.1 When do you pay your deposit?

Key milestones:

• Holding deposit / reservation fee – a small amount (often a few thousand dollars) to reserve the unit while contracts are prepared. Usually refundable if you don’t proceed.
• Exchange deposit – the main deposit (5–10%) paid when you sign and exchange contracts.
• No progress payments – for most residential off‑the‑plan apartments, there are no construction progress payments; you just pay the balance at settlement.

Always confirm with your solicitor that your arrangement is a standard residential off‑the‑plan contract, not a ‘build under a building contract’ structure with stage payments.

2.2 Where does your deposit sit?

In a typical arrangement:

• Your exchange deposit is paid into the developer’s solicitor’s trust account or an agent’s trust account.
• Funds are held there until either settlement or until a valid trigger in the contract allows release.
• Interest on deposit funds (if any) is usually dealt with in the contract – sometimes split between parties, sometimes kept by the developer.

This is one reason you should have a property lawyer review the contract before paying anything substantial.

2.3 What if the project is cancelled or doesn’t proceed?

If the developer doesn’t meet conditions precedent (for example, fails to achieve pre‑sales or finance and the project is cancelled under the terms of the contract), typically:

• Your deposit is refunded, usually in full.
• You don’t receive compensation for time or forgone opportunities unless the contract provides for this.

However, if you default (for example, you can’t settle because you can’t get finance), the developer may be able to keep your deposit and pursue you for other losses. That’s why getting your finance strategy and buffers right from day one matters just as much as choosing the building.

For a structured overview of how lenders view off‑the‑plan risk, see Off‑the‑Plan Home Loan Basics and Eligibility in Australia.

3. How much deposit is really “enough”?

3.1 Linking contract deposit, LVR and LMI

Your contract deposit and your lender’s LVR rules need to line up.

• 80% LVR or lower – usually no LMI, but you need to contribute at least 20% of the property’s value plus costs.
• Above 80% LVR – LMI usually applies, increasing your upfront or capitalised costs.

For a $800,000 unit valuing at $800,000 at settlement:

• At 80% LVR, max loan ≈ $640,000.
• You must contribute $160,000 plus costs (less any rebates) – not just the $80,000 contract deposit.

If the property values lower at completion (say at $760,000), your required cash contribution can jump unexpectedly. Managing this risk is covered in detail in “What To Do When Your Off‑the‑Plan Valuation Falls Short” [/insights/off-the-plan-valuation-shortfall-what-to-do-next].

3.2 First‑home buyers and government schemes

If you’re a first‑home buyer, you may not need a full 20% deposit.

Key levers:

• First Home Guarantee (FHBG) – the government guarantees part of your loan, allowing eligible buyers to put down as little as 5% without paying LMI, subject to price caps and strict timeframes.
• State first‑home concessions – reduced stamp duty or grants, depending on the state and property price.
• First Home Super Saver (FHSS) – lets you withdraw certain voluntary super contributions to use as part of your deposit.

These can all be used with off‑the‑plan, but only if the build and occupation timelines fit the rules. The practicalities are covered in Using the First Home Guarantee to Buy Off‑the‑Plan: A Practical Guide.

3.3 Investors, self‑employed buyers and jumbo loans

For investors and self‑employed buyers, lenders may be more conservative:

• Investors borrowing interest‑only or at higher LVRs may face stricter rent and expense assumptions.
• Self‑employed borrowers are often assessed on the lower of the last two years’ tax returns or the average, which can shrink borrowing capacity if income is volatile.
• Larger loans (around or above $2m) are often treated as “jumbo” exposures with lower maximum LVRs, meaning you may need significantly more than a 20% contribution (see [/insights/lvr-lmi-jumbo-loans-over-2-million]).

For these groups, “enough” deposit is less about hitting a single percentage and more about leaving room for valuation changes, interest rate rises and business ups and downs.