A couple exchanged on an off-the-plan two-bedroom in a Rhodes development two years ago.
The lender lends against the valuation, so the $40,000 gap comes from your savings, a higher loan-to-value ratio with mortgage insurance, or family help. A second valuation with strong comparable sales can sometimes narrow it.
Planning a buffer at exchange is what keeps it from stopping settlement.
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Book my free callCharles at Links Property Finance made buying our first home so much easier than we expected. As first home buyers, we had a lot of questions around borrowing capacity, our deposit and the different government schemes available to us. Charles explained everything clearly, compared different lenders and kept us updated throughout the whole process. He was always easy to reach and made sure we understood what was happening from pre approval right through to getting our home loan approved. We would definitely recommend Links Property Finance to anyone looking for a mortgage broker, especially first home buyers who want someone to guide them through the process.
Paperwork and finances were never my strong suit. He has made this process as simple and dummy proof for me as humanly possible. This is not the first time I use a mortgage broker, however it was the easiest and most pleasant.
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Charles Touma, Mortgage Broker.
The shortfall is not negotiable with the valuer, but it is not the only valuation in existence either. Different lenders use different valuers, and off-the-plan stock in large developments is exactly where valuations spread widest.
The couple's constraint is time: a second lender means a fresh application inside ninety days. Their resources are the extra savings, family help if offered, and lenders' insurance as a priced option above 80%.
The full cash position against the worst-case gap. A second valuation through a different lender, sometimes the spread between two valuers covers most of the shortfall by itself. Family options, structured properly as a documented gift or limited guarantee.
The LMI mathematics: settling above 80% of valuation with insurance, priced against the cost of finding more cash. And the calendar, worked backwards from the settlement notice with no optimistic slack.
Valuation shortfalls at settlement are a structural feature of off-the-plan buying, not bad luck, two years is a long time in any market, and big developments settle in waves that valuers can see. The couple's position resolves because they held reserves and moved early.
The version of this scenario that ends badly is the one where every dollar went into the deposit and the shortfall letter sat unopened for a month.
If you are buying off the plan: keep a settlement reserve beyond your deposit, get finance moving the moment the settlement notice window opens, and never assume the valuation will match the contract.
If you are already staring at a shortfall: the sequence is quantify, re-value, then choose, and the ninety days are for working the problem, not hoping it resolves.
The lender lends against the valuation, not the contract, so the gap becomes extra cash you must find at settlement. Off-the-plan carries this risk because settlement can be years after the price was set.
Yes, while there is time: a different lender’s valuation, restructuring the deposit, or a family guarantee to cover the gap. After an unconditional exchange the options narrow sharply.
Both, in effect: an assessment at exchange for realism, and the actual approval close to settlement because approvals expire. A plan for the years in between is part of buying off the plan. Off-the-plan loans has the timeline.
Thirty minutes with Charles, this week: the gap quantified, a second valuation moving, and the cheapest workable bridge across it.
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This is an illustrative example scenario, not a description of a specific client and not a testimonial. The figures are realistic but rounded, no lender is named, and no outcome is promised, every application is assessed on its own facts. General information only, not credit or financial advice.
