With Sydney offering such a wide array of properties for buyers, settling on just one type can seem like quite an arduous task. In fact, figures from CoreLogic RP Data Senior Analyst Cameron Kusher show that over the past two years, the average number of building approvals has expanded to 17,861 approvals a month – this is a staggering increase from the 13,922 average recorded for the decade gone by.
But what if you want to get a head start and snap up one of these new homes – before they’ve even been built? Known as ‘buying off the plan’, this approach is becoming a popular way for young buyers and inexperienced property investors to make their first step onto the property ladder.
The process for buying off the plan is slightly different than the normal home buying procedures, with a number of different factors to consider. By following these tips as a starting point, you can get an idea of what’s involved and if it’s a good option for you.
Understand the contract
When buying off the plan, you normally have a fair chunk of time to get your affairs in order. The settlement typically isn’t due until the building is finished, meaning you can make all the arrangements for your home loan, save the funds for the settlement and, if you’re a first time buyer, organise your application for the first home buyer grant. You may even be eligible for stamp duty concessions!
But there’s one thing you should look at above all the advantages – the contract. This document should contain all the finer details about the purchase, such as the terms for visiting the site during construction, personal touches you can make, as well as any contingencies if the project is delayed. Have a careful look through it yourself, and get your solicitor or conveyancer to also go through it with a fine-toothed comb.
For instance, it’s important to understand your responsibilities and make sure that your deposit is secure if the development doesn’t go ahead as planned. While the completion date normally isn’t set, the developer may have a timeline they are working to, so be sure to ask questions. What’s more, there may be hidden costs that weren’t obvious in your first read through. Independent legal advice can help you get these crucial points down pat.
Do your research
Unlike a conventional purchase, you don’t have the tangible building to inspect with your very own eyes. Instead, you’ve got a set of plans and an impression of what the development will look like once it’s completed. It’s worth doing your own background check into the developer, builders and architects who are putting your future home together.
What’s their track record? This might mean visiting their present developments to get an idea of reliability and quality of finish. After all, you want to be confident that your property will be completed to a high standard.
There are benefits and pitfalls to buying a home off the plan, so it’s important to have all the facts before making a final choice. For help figuring out what you can afford to borrow, make sure to speak with our team of home loan experts at Bank of Heritage Isle.