Securing a property requires a significant investment. This is always an undertaking, and even more so for off-plan property purchases simply because you haven’t seen your new home. It may also be possible that this won’t be what you expected, for better or for worse.
To learn more (and to keep you from suffering from buyer’s remorse), here’s your guide to buying an off-plan property in Australia.
What It Means to Buy “Off-Plan”
Off-plan purchases are an excellent way for first-time buyers or investors to enter the property market. However, in contrast to traditional purchasing, you may encounter construction issues, or the construction and move-in timelines may be extended.
Established home purchases, as opposed to off-plan purchases, allow for immediate occupancy. Although buying a pre-existing home may also entail buying a structure that has already been built to the previous owner’s taste.
What to Ask before Making the Purchase
Buyers lack control over the process because they do not have the same rights as contractors, which can be unsettling. Here are some questions to ask yourself and your contractor:
- What exactly is a deviance from the original plan?
- What is the seller’s reputation?
- What is their level of expertise in this field?
- What do their peers think of their finished work?
- Is it common for them to be completed on time?
- Do they follow up on issues that arise as a result of a settlement?
- How closely did the project follow its original scope of work?
- What if the construction timetable needed to be extended?
The Pre-Approval
Pre-approval for your off-the-plan purchase can help speed things up. It is entirely up to your bank to make this decision. Many people are unaware that the bank bases the amount of money they will lend you on the value of the property. This means that the bank may want to wait until the job is finished before approving the loan.
To avoid this, you must demonstrate to your lender or bank that you are not at risk and qualify for pre-approval. Working full-time, maintaining good credit, regularly saving, and limiting your spending for up to two years prior to applying all contribute to your eligibility. Finally, banks can look at your spending history to see if you are a wasteful spender.
The Purchasing Process
Once you’ve found the perfect location, you should consult with an attorney to ensure that the contract you receive contains all of the necessary information. The purchasing process is as follows:
Step 1: The Cooling Off Period
The majority of Australian states allow for a 3-5-day cooling-off period. You may be charged if you do not complete the transaction. The contract contains specifics.
Step 2: The Project Plans
These outline what will be built and how it will be built. Ensure that the work promised to you is completed on time.
Step 3: The Deposit
A 10% down payment is typically required when purchasing a home, but this amount varies depending on location.
Step 4: The Inclusions
Check the warranty provisions and inclusions in the contract. The contractor may need to make changes to the original design; therefore, confirm what those changes are and how they will impact your property.
Step 5: The Financing and Payment
Make sure you have enough money to pay the contractors. They usually give you 30 days to secure the funds, so plan ahead of time.
Step 6: The Defects
Construction issues do arise, and it is critical to include a clause in the contract that holds the contractor accountable for any required changes or repairs.
Conclusion
When making a major decision, it is critical to weigh the benefits and drawbacks. You will need to spend more time preparing because your new home is not yet built. Depending on the construction process, you will have 1-2 years to prepare financially, as these processes require time and money, both of which you can afford if you buy off the plan. So before signing anything, you should conduct due diligence.
Are you looking for a conveyancing manager? Bickell & Mackenzie is a well-known Redlands family law company that focuses on Conveyancing (buying and selling homes), Estate Planning, and Family Law. Give us a call today!
