Written by

Steven Lee

Mortgage Director, ODIN Mortgage & Tax

10+ years in Australian banking and mortgage lending

Last reviewed

Updated on: October 13, 2026 View profile →

Buying off the plan from overseas can look like a smart move on paper: a lower entry price, a longer settlement timeline, and the promise of capital growth before you even take ownership. But for Australian expats, the gap between signing a contract and settlement day carries a cluster of risks that most developers and marketers will not volunteer. Valuation shortfalls, shifting lender policies, and expat-specific borrowing constraints can unravel a purchase that looked solid at contract stage. Understanding these risks before signing is not optional. It is the difference between a successful property purchase and losing your deposit.

What Is the Valuation Risk in Off-the-Plan Purchases?

Valuation risk is the possibility that a bank’s independent valuation of a completed property comes in below the price you contracted to pay before construction. This risk sits at the core of why off-the-plan purchases deserve extra scrutiny from expats.

When you sign an off-the-plan contract, you agree to a price based on architectural renders, comparable sales at that moment, and a developer’s projections. The bank, however, values the property when it is completed, which can be 18 months to three or more years later. If the market has softened, or if comparable sales in the same development or neighbouring ones have weakened, the bank’s valuation may land below your contract price.

• The funding gap problem: Banks lend against the lower of the contract price or the bank valuation. If the valuation is $50,000 below your contract price, you must fund that gap from your own cash. There is no negotiation with the developer once contracts are exchanged.
• The deposit at risk: If you cannot fund the gap and cannot complete settlement, you risk forfeiting your deposit and potentially being pursued for further damages by the developer.
• New apartment supply risk: High-density developments in particular carry the risk of a large number of identical or near-identical units hitting the market simultaneously, which can suppress comparable sales evidence used in bank valuations.

“The valuation shortfall does not appear on any marketing brochure. It emerges on settlement day, and by then, your options are limited.”

How Does Foreign Income Shading Make This Worse for Expats?

Building on the valuation gap problem, expats face a compounding issue that domestic buyers simply do not: foreign income shading. This is the practice by which Australian lenders discount overseas income when calculating borrowing capacity, and it directly affects how much a bank is willing to lend you at settlement.

When you applied for a borrowing assessment or assessed your borrowing power at contract stage, that assessment was based on lender policy at that time. Between signing and settlement, several things can shift:

• Your income currency may have depreciated against the Australian dollar, reducing your effective borrowing power.
• A lender that previously accepted your income type may have tightened its policy for non-resident borrowers.
• Your employment situation or visa status may have changed, placing you into a different lending category entirely.

Different Australian lenders apply different shading rates to foreign income. Some lenders accept foreign currency income at a higher effective rate than others. This data is not published publicly. ODIN Mortgage holds lender-by-lender foreign income shading data across 40+ Australian lenders, built over a decade of deal flow. That intelligence matters most in high-risk scenarios exactly like off-the-plan settlement.

What Lender Policy Changes Should Expats Worry About?

Lender policy is not a fixed document. Banks adjust their appetite for expat lending, their acceptable income currencies, their LVR limits for non-resident borrowers, and their stance on certain property types based on their own risk appetite, APRA guidance, and market conditions. These changes are subject to lender discretion and can occur without public notice.

Note: All lender policies listed above are subject to change. Borrowing outcomes depend on individual circumstances and lender policy at the time of application.

What Are the FIRB and Tax Costs Expats Often Underestimate?

Stepping back from lending mechanics, a separate concern is the upfront cost structure that applies specifically to non-resident purchasers. Many expats focus on the property price and underestimate the regulatory costs layered on top.

• FIRB approval: Most Australian expats who are permanent residents or citizens are exempt from FIRB requirements for established dwellings, but those on temporary visas or purchasing as foreign nationals must seek approval and pay a fee scaled to the property value.
• Foreign purchaser stamp duty surcharges: Several Australian states apply additional stamp duty surcharges to foreign purchasers. The applicability of these surcharges depends on your residency status, visa type, and the state in which the property is located.
• CGT implications: Non-resident owners face different capital gains tax treatment compared to Australian residents, including the potential loss of the 50% CGT discount and the main residence exemption in certain circumstances.

As part of ODIN, ODIN Mortgage coordinates mortgage structuring and tax planning through ODIN Tax from day one. This integration matters particularly for off-the-plan purchases, where the gap between contract signing and settlement creates time to get the ownership structure right before it is locked in.

How Should Expats Protect Themselves Before Signing?

The protections available to an expat buyer are far stronger before contract exchange than after. Once you have signed and paid a deposit, your options narrow significantly. Here is a practical framework for managing these risks:

1. Get a formal borrowing assessment first. Not a marketing estimate from a developer’s referral broker. A formal assessment from a specialist in expat home loans in Australia, using your actual income currency, employment structure, and residency status.
2. Understand the lender’s policy on off-the-plan and high-density stock. Some lenders restrict lending on apartments in buildings with more than a certain number of units, or in postcodes with high new supply. These restrictions are not always obvious at inquiry stage.
3. Build in a cash buffer above the valuation gap. Conservative planning assumes the property settles at less than the contract price. Know the maximum gap you could fund from existing liquid assets before you commit.
4. Check FIRB requirements and stamp duty surcharges for your specific residency status and state. These are not uniform across Australia.
5. Engage a conveyancer or solicitor with expat experience before signing. Contract conditions, cooling-off rights, and sunset clauses in off-the-plan contracts vary by state and by developer.

Frequently Asked Questions

Can I get an expat home loan in Australia for an off-the-plan property?

Yes, but lender appetite for off-the-plan properties varies. Some lenders are more conservative about high-density apartments or certain postcodes. Your eligibility depends on your income type, currency, residency status, and the specific property. Borrowing outcomes depend on individual circumstances and lender policy at the time of application.

What happens if the bank valuation comes in below the contract price?

The bank will lend against the lower figure. You must fund the difference in cash at settlement. If you cannot, you risk defaulting on the contract and losing your deposit.

Do Australian expats need FIRB approval to buy off the plan?

Australian citizens and most permanent residents are generally exempt from FIRB requirements, but this depends on visa type and individual circumstances. Foreign nationals and temporary visa holders typically require FIRB approval and may be subject to associated fees. Always verify your specific situation before purchasing.

How does foreign income shading affect my off-the-plan purchase?

Lenders discount overseas income when calculating borrowing capacity. The shading rate varies by lender and by currency. If your income currency depreciates or a lender tightens its policy between contract and settlement, your borrowing power at settlement may be lower than it was when you signed.

Can I lock in finance now for an off-the-plan property settling in two years?

Formal assessments of borrowing capacity typically have limited validity periods and lending cannot be locked in years in advance. Lender policy can change between now and settlement. The most important step is understanding which lenders have stable policies for non-resident borrowers and building a plan that accounts for policy risk over a multi-year timeframe.

Are there stamp duty surcharges for expats buying off the plan?

Foreign purchaser stamp duty surcharges apply in several Australian states and depend on your residency classification, not just your citizenship. The rules differ by state and are subject to change. Seek specific advice on your circumstances before budgeting for a purchase.

Is buying off the plan ever a good strategy for Australian expats?

It can be, particularly where the contract price reflects genuine value, the developer has a strong track record, and the buyer has sufficient cash reserves to absorb a potential valuation shortfall. The risks are manageable with the right preparation. The mistake is treating off-the-plan as lower-risk simply because settlement is in the future.