Buying ‘off the plan’ means buying a property that hasn’t been built yet. Essentially, you are buying a promise that a certain property will be constructed and delivered to you, within an agreed timeframe, whilst meeting certain plans and contract conditions.
The Process:
- We strongly recommend that you get in touch with us as soon as you start thinking of buying off the plan. We can carefully review your financial situation and advise whether you would be in a position to afford the loan or not – this would of course be based on current circumstances and lender’s policies.
- Once you have found a property, we recommend that you engage the services of a solicitor who can carefully review the contract of sale to ensure that your expectations on the property reflect what you are paying for. This includes revising the details about features, fixtures and fittings. It also allows the solicitor to check if there are any conditions that may affect you down the track.
- Once the contract has been reviewed, it is time to exchange it! Most developers will request a 10% deposit at this stage. Once this is paid, the construction process begins.
- We will not apply for a home loan at this stage for the simple reason that most lenders will provide you with an approval for finance that only lasts between 3 and 6 months – which is not enough time for a property to be built.
- We will be in touch with you, the developer and your solicitor to keep track of how the construction is progressing and once your property is close to the completion stage, it is time to apply for a home loan.
- We will request you to provide us with updated information regarding your financial situation and we will revise the current offers among the lenders. Once we have chosen a lender, a product and the most suitable structure of your loan, we will then submit an application to the lender.
- The process from here is the same as purchasing a house: the lender may request further information to assess your application and if not, the next step is a valuation on the property. Once again, we will be in touch with your solicitor and the developer and as soon as the property is ready to be inspected, we will organize the valuation on your behalf.
- Once the valuation report is back, the lender will be able to issue you with an unconditional approval followed by loan documentation.
- Time to celebrate: once the loan documents have been certified by the lender, they will be ready to settle on the property on a date as agreed with the developer.
The Benefits:
- You would usually be able to lock in a good price because many developers offer lower prices before a construction starts
- In Australia, you have many possible financial benefits: capital growth – when your property increases in value while it’s being built -, depreciation benefits and government grants.
- If you are a first-home buyer you will benefit from stamp duty exemptions and concessions as well
- If you’re buying as an investor, you can claim not only depreciation, but also fixtures, fittings and in some states, get stamp duty exemptions
- You only need to pay a 10% deposit upon signing the contract and the remaining will only be required by the developer once the property is finished (it can take as quick as 6 months and up to 18 months);
- You can benefit from the builder’s guarantee, where structural or interior defaults must be repaired by the builder – if within the first 7 years;
- It can be a more affordable option if compared to some existing properties in the market;
Things To Consider:
- Think ahead of the time and research! Are there any future developments in the area that could cause disruption to your quality of life by blocking a promised view for example, or worst case scenario, that could cause a decrease on the value of your property?
- If the property market falls, interest rates rise, bank policies changes… Will you still be able to get a loan once the property is completed?
As usual, if you have any questions, don’t hesitate to reach out! Call us at 1800-3-PEASY.