Buying off the plan is an attractive option for many property purchasers. It simply means buying a place that hasn’t been built yet, using the builder’s plans as a guide to the completed dwelling.
The two big advantages of buying off the plan are that you get to move into a brand new home, and you avoid the massive expense of stamp duty.
Given that you can’t actually see what you’re buying, it’s not an entirely risk-free transaction. It’s important to be informed of any potential concerns. Here are three suggestions to make sure nothing goes wrong.
Know your developer or builder
It is a sad reality that some people fall prey to shady contractors. Also, as we have seen recently, a sluggish market or shifting economic conditions can expose builders to financial risk even if they are typically reliable. Because of this, it’s critical to understand the builder or construction company’s background, the type of work they’ve done in the past, and whether or not their prior clients were satisfied with the results.
Be careful to do your homework on the builder, look for reviews on online discussion boards, and, if you can, visit finished projects they have worked on. Also be prepared to ask the tough questions about the company’s financial position.
Make sure you understand the construction timetables and the level of control you have over finishes (bench surfaces, paint colour, knobs and handles, curtains and blinds, etc.) and appliances when it comes to the actual building process. It would even be worthwhile to request permission to visit a couple times while work is being done.
Know your contract backwards
Your contract is a crucial legal document, so make sure you’ve gone through it thoroughly with a real estate specialist. Although it may seem like an extra cost now, it will ultimately be much better to be thorough. Discuss any issues or hazards that can arise while buying off the plan with your broker as well.
Construction projects frequently go beyond schedule. It might cause a lot of needless stress and expense if your move-in date changes at the last minute. Make sure the contract is clear regarding, among other things, the penalty that will be due if the project is delayed and what will happen to your deposit if the build doesn’t take place at all, or at least within a reasonable amount of time.
Keep an eye on your finances
The fact that you have more time to save is one benefit of buying off the plan. Nevertheless, there will be upfront charges, such as a deposit, and then there will be the remaining balance, which is due after the job is finished. Discuss the scheduling of everything with your broker, and make sure you have pre-approval set up with plenty of time to spare.
Also be aware that your contract probably allows for the developers to charge more that their initial estimate. While this protects the developer, it can be an unwelcome extra cost at the last minute.
Your broker can also inform you of your eligibility for concessions or other benefits that governments may provide to property owners who purchase off-plan. Additionally, you can find out more about making this kind of transaction as risk-free as possible by visiting the NSW office of Fair Trading.
Consult your broker
At Mortgage Broker Sydney, our expert brokers will offer you insights and guidance to make the process of purchasing off the plan simple and straightforward, regardless of whether your queries are about contracts, the reputation of your builder, or making sure you are financially prepared.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!