When it comes to properties, you can either purchase an established home or buy off the plan. The latter means you will be buying property that has not yet been built.
Buying off the plan has its advantages. For one, it lets you buy the property based on its current market price even though it will be completed in the future, which means the property could increase in value if the market experiences growth during the construction process. Also, since you only need to put down a deposit, you will be able to secure a high value asset without shelling out a huge amount of money upfront, giving you time to organise your finances.
As with buying any other property, purchasing off the plan is a huge endeavour. Thus, here are some things you need to take into account, including:
Doing your research on the developer. Check the other properties that they have recently developed. Do they always deliver on their promise? Do you know the kind of insurance that they have? You may also want to ask other buyers and see if they are satisfied with the end results.
Aside from checking the track record of the developer, you may also want to look into the work history of other people involved including the builder, architect, and sales agent.
Location, location, location. It can never be said enough: location plays a huge role in buying an off-the-plan property, or any other investment property in general. Make sure to visit the area. Is it a prime location? Are there other buildings being built there? Is it close to where people work? Is the area close to shops, banks, restaurants, and/or other establishments? Also, check the model unit or display home. Take note of the fixtures and fittings.
Check the contract. It will be better if you work with a solicitor who can review the contract and discuss the terms and conditions with you. There are a lot of things to take into account but the basic ones include the completion date, fees or penalties (if any) should you withdraw the contract, home warranty insurance, clauses on acquisition, consequences of non-completion, as well as rights to sell your property. Do not sign any contract unless everything is clear to you.
Check your financial capacity. It is important to determine your financial position at this stage. Buying an off-the-plan property will require you to put down a deposit to secure “today’s price” which may vary depending on the developer and location. It is highly recommended in this situation for homebuyers to apply for an unconditional pre-approval, for financial security before signing any contractual agreements. Keep in mind that banks have certain lending policies when it comes to different types of properties in different locations.
There are a lot of things to consider when buying an off-the-plan investment property. Think things through and make sure that everything is in order to minimise, if not avoid completely, the risks involved in buying one.
At Launch Finance, we provide you with the professional advice you need when it comes to the latest loan products, or finding the most appropriate type of loan for your unique requirements. For more information on our services, please send us an enquiry today.