Every lender has their own terms and conditions, and this is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.
Off the Plan property is a property that has not yet been fully constructed. Some developers offer the chance for buyers / property investors to purchase a property before work has started.
✓You save on Government Stamp Duties.
✓Customising the property to your personal needs and tastes.
✓New materials and equipment with warranties can make for better efficiency and lower maintenance costs.
✓Possible increase in property prices before you start paying back the loan.
✓Investors may be able to take advantage of tax depreciation benefits
Things to consider
Signing an unconditional contract to buy a property, often more than 1 year in the future has some inherent risks that must be considered.
They include, but are not limited to:
✓Reduction in the value of the property purchased if the general property market falls or if there is a flood of similar properties for sale at the same time.
✓Change in Lender credit lending rules and policies.
✓Reduction in your cash available to finalise the purchase (settle).
✓Reduction in equity in other property which you may need to settle.
✓Change in your personal employment and/or income position.
✓Increase in interest rates will reduce your maximum borrowing power.
✓Consider your options if the developer goes bankrupt prior to completion.
✓It often isn’t possible to get unconditional approval prior until the off-the-plan property is close to completion (1-2 weeks prior)
✓You may have to apply for a loan about 6-8 weeks prior to certificates of occupancy being issued. Lender policies that are current may then will take precedence over any pre-approval you already had in place.
✓The lender Loan to Valuation Ratio (LVR) may be calculated on the lower of contract purchase price, or the valuation close to the time of completion.
(see also EquityVision Tips – Construction of a Property)