Off the plan purchases can be a great way to access any applicable government grants, secure a property now, save up the funds required to settle once the property has been completed in the following 1/2/3 years’ time, and the property may be worth much more than you paid for it at the time of settlement.
There are some important mortgage related aspects to consider before you sign the contract for off the plan purchases;
· Most developers have sunset clauses in the contract, where the contract can be voided by either you or the developer after a set period of time following exchange of contracts, usually 2 or 3 years if settlement is not completed.
· The property can be valued less than what you paid for the property as the market may be down at that time. That means the bank may not give you what you need to settle.
· Your income/employment/expenses/liabilities may be different at the time of settlement, and you may not be able to get the loan you need to settle.
· A bank approval generally only lasts for three months, so there is no guarantee you will be able to get a bank loan at the time of settlement.
If you have any questions, please reach out. Tom.
Written by Tom Morison