It’s an exciting time, you’ve decided to buy a property off the plan which means you will have a BRAND-NEW home! It’s important you are clear on what’s involved and ask the right questions. Here’s the first 5 to get you started:
1. Do you know the risks?
When buying an apartment, unit or house off the plan, you’re purchasing a promise. You can’t step into the future and inspect the property you’re buying. Thoroughly investigate what the finished product will look like and explore the risks with your broker in regards to your finance for the purchase.
2. Does your contract limit your risks?
The contract should be comprehensive, covering everything from price, completion date and your legal rights, to conditions such as:
- whether you can on-sell the property before it’s completed?
- what happens to your deposit if the building doesn’t go ahead?
- what happens if completion is delayed?
It’s important to obtain legal advice before entering into any contract. If your settlement agent is also a qualified solicitor with property expertise, they could be a good point of contact to know what contractual risks may be inherent.
3. Who is the builder or developer?
Before you’re committed to buy, it’s important to know your builder is reputable. Visit the building company’s website, research and visit past projects as well as visit any display homes. Online forums, Google and the company’s Facebook business page are a great way to find company reviews. You could also do a Google search on the company to see if there are any positive or negative press articles regarding their construction projects.
You should consider how much input you will have during the construction phase. Can you make site visits during construction? Can you make changes to the finishes and select the appliances? Can the builder make changes without telling you?
4. Are you eligible for government grants and concessions?
The best thing about buying off the plan is owning a shiny new place. Another perk is the possibility of government grants and concessions for off-the-plan buyers. In Western Australia, first homebuyers buying off the plan may be eligible for a $10k grant and a possible waiver of stamp duty. Visit the WA Department of Finance for the most up to date information.
5. Are you financially ready to buy off the plan?
You’ll usually need a deposit to secure the property, plus progress payments and the final balance payable upon settlement. Due to the longer waiting period between exchange of contracts and settlement, those requiring loan pre-approval should check the expiry date of the pre-approval.
While there are some risks when buying off the plan, being prepared, asking the right questions and talking to your mortgage broker about your finances can provide you peace of mind whilst you wait to move in to your brand-new home! One of our expert mortgage brokers can help you navigate the process with valuable advice, you can book a free consult by calling (08) 9367 4222, email us or fill in the contact form on this page.
Here are some great WA resources to further your research:
https://www.commerce.wa.gov.au/announcements/consumer-advice-buying-property-plan
https://www.finance.wa.gov.au/cms/State_Revenue/FHOG/First_Home_Owner_Grant.aspx