Buying Property Off the Plan [Avoid these 6 Things]

Buying off the plan has a certain allure, like having a baby, you’re there from its inception, a truly very special moment. But looking past the facade what are the big mistakes when buying off the plan?

00:00 Buying Property Off the Plan [Avoid these 6 Things]
00:39 1. Rebates
02:09 2. Property Valuations
05:15 3. Delays to settlement
06:30 4. Changing circumstances
08:29 5. The Details you need to know
09:46 6. Most Common Off the Plan Mistakes
And in this video I’m going to walk you through 6 ways to avoid the BIG mistakes when buying off the plan, step by step, so keep watching!!!
1 Rebates
It’s very common for developers to offer rebates when buying off the plan. But beware. Doing so, is a huge mistake!
Banks and lenders look at incentives as a price reduction. Side note, incentives are commonly called rebates, stamp duty waiver, deposit match or furniture sets.
So for example, if you were to buy an off the plan unit for $500,000 and the developer offered a rebate of $50,000 dollar the bank’s valuer will adjust accordingly. Thus adopt the difference between or $450,000.
Which in the end means the rebate is simply a discount rather than a benefit as reduces the purchase price and thereby the valuation.
Knowing this will ensure you don’t get caught in thinking that these rebates can be considered as your deposit and therefore allow you to save sufficient funds to complete the purchase.
So if you’re buying off the plan, remember that all rebates and incentives are taken off the purchase price.
2 Valuations
Oftentimes buying off the plan means that you sign a contract today but own and pay for the property tomorrow. Paying for the property is referred to as settlement and essentially means you own it (this is where your mortgage repayment starts).
The time frame from when you sign the contract and when you settle varies from months to years and typically is between two and three year.
The problem with this is that the property market is fluid, it’s always moving and therefore the market you buy in isn’t the same as the one you settle. It’s because of this that the valuation becomes an issue.
The three reason valuations can fall short includes;
- 1 - Softening market - an easy way to think of this is signing a contract at the peak of the market and settling in the bottom. Even if the property you bought was exceptionally priced the trouble is that they’re two separate markets. Therefore a high chance your valuation will fall short, through no fault of your own. This is really just something to be aware of as nobody really knows when the peak or even bottom of any market is.
- 2 - Oversupply - when it rains it pours. So although when you signed a contract may have been few similar properties for sale, when it comes time to settle, this could have all changed so drastically. Especially if you’re buying in a high growth zone. Oversupply can mean because of competition amongst sellers, that prices fall. If this is the case will impact the valuation of your property. Like before, not much can be done here except to be aware of the risks associated.
- 3 - Changes in the surrounding area - because of the time it can take for your property to be completed a common problem is for your view to be taken away due to the start of another development in the area which you weren’t aware of.
And whilst there are so many variables and much outside of your control in way of valuation, it’s by understanding the details which allows you to make an informed decision.
3 Delays
It’s almost a certainty that there will be a delay to the completion date. It’s because there are just so many different professionals needed when building. From architects, electricians, to the local council and everyone in between. Know this, understand that handover is unlikely to happen as expected, which will allow you to take this into consideration and that rather than ending your lease abruptly can work with your landlord to ensure a smooth transition toward the unknown, and by doing so keeping them on side.
4 Changing circumstances
The lending landscape is a constant. In short, banks are assessing their credit criteria to either become harder or easier for various reasons from risk mitigation to regulatory requirements.
Here are 6 things that could affect your ability to borrow if your circumstances change from the time of signing the contract to the time you’re ready to settle.
● 1 Employment - e.g. if you go from full time to casual
● 2 Income reduction
● 3 Higher expenses
● 4 Borrowing capacity - the banks changing their assessment rate, which means even if nothing changes the amount you can borrow will reduce as a result
● 5 Deposit requirements - lenders requirement more than when you had initially signed the contract
● 6 Postcode restrictions - changing credit criteria, meaning that lenders either are unable to lend in that postcode or require significant deposits.

Видео Buying Property Off the Plan [Avoid these 6 Things] канала Mortgage Broker Brisbane - Hunter Galloway