The changes in housing prices over the years has left many first home buyers feeling the pinch. Getting your foot in the door in this market has never seemed more difficult; the cost of living is one thing, but owning your own property is another.
One way you can break into the market is by buying off the plan.
What does buying off the plan mean?
Buying a property off the plan means signing a contract based on the blueprints. You can view the plans and design, however there is no physical building to inspect. This type of purchase is typically more affordable as you only need a ten percent deposit and you won’t be paying a mortgage straightaway.
Some homeowners and investors tend to also go down this route with the idea that the investment will be worth more, once it is finally finished. The housing market has a history of increasing each year, so this usually works out well in the long run.
If you’ve decided to go with this method of purchase, here’s our pick of the best buying off the plan tips.
1. Developer research is key
It’s important to know who your developer is. You’ll need to research their background and experience to ensure they can be trusted. Find out if they’re licensed, what past projects they’ve worked on, their standards, if they’ve got DA Approval and whether or not they complete projects to schedule. You can usually find this all on the internet!
2. Prepare for delays
In any building industry, there are going to be delays – whether man-made or natural (rain, floods). Be prepared for this; even if it doesn’t happen, it’s handy to keep in mind that things might not run as smoothly and to time as you’d like.
Before you sign the contract, find out when construction is due to start and if the developer has met their pre-sales target. A house off the plan will have a shorter construction time, compared to a high-rise apartment development.
3. Get the contract looked over
Buying off the plan is a little different to buying an established property. The contracts are more complex and usually ridden with clauses that favour the developer. Always make sure you have the contract looked over by an independent property lawyer who can explain and negotiate on your behalf.
4. Location, location, location!
To get the most out of your off the plan purchase, you should:
- Check the location: As there’s little to go on other than the specs, pay close attention to the location of your off the plan purchase. Is the view attractive or is it facing a wall? Does it face towards a busy and noisy street? Is there a car space?
- Look for crime reports: Do your research on crime statistics for the area. Is it safe?
- Consider transport and local points of interest: Is there a train station close by? Do buses frequent the area? How far is the closest shop?
5. Consider the costs
The ten percent deposit might seem attractive; however, you should also take into consideration the “hidden fees” involved in buying off the plan. Budget for legal fees, stamp duty and maybe even property management fees.
Buying a property – whether off the plan or established – is big! It’s probably the biggest purchase you will ever make in your life, so make sure you protect it with our mortgage protection plan. We’ll help protect your ability to meet your repayment commitments.
Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSG 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement when deciding if this product is appropriate for you.