Property being built

Tips for buying off-the-plan as a first time buyer

Leah Johnson, Solicitor at Rethink Law

Are you looking to buy your first home but you’re not sure where to start? Many first home buyers are opting to choose off-the-plan purchases as their first home for the various benefits offered:

  • price – pay current market rent for a property completed in the future
  • increase in property value – market growth over time
  • stamp duty savings – there are exemptions and reductions of stamp duty for first home buyers
  • time – time to save and time to plan. If you are looking at purchasing your first home, it is great to plan ahead.

Our team of solicitors and conveyancers can tell you how to get started now. If you need help understanding the process or just have a general question, I’d love to support you. Feel free to book an appointment to come for a coffee (from our own in-house coffee shop, Recharge Espresso) and speak to one of our conveyancers (02) 4962 4440.

Here are some tips to get you thinking:

Many buy off-the-plan as an investment, but purchasing fresh off the production line can also offer real advantages for first homebuyers.

First homebuyers are generally short on cash and as a result have difficulty in finding funds quickly that are required for a finished property with a sort term settlement.

Buying off-the-plan will give a first homebuyer time – time to save for settlement, time to plan for settlement, potentially time for capital growth prior to settlement (as most developers offer lower prices and financial incentives at the start and put prices up once construction has commenced) and time to make all the relevant applications for the first homeowners grant.

Buying off-the-plan will also give a first homebuyer advantages not available to a purchaser of finished second hand property, like:

  • Stamp duty savings in many instances.
  • The ability to customise floor plans and finishes.
  • More choice in terms of apartment types, which means greater choice of layouts, views and finishes.
  • Easy payment terms with only 10% deposit required and the balance due on settlement.
  • Often, interest on deposit can be received when cash deposits are paid.
  • Security for deposits as all deposits are held in trust.
  • Alternative deposits, which mean you can use a lower cash deposit, a bank guarantee or a deposit bond (project dependent).

5 tips to buying off the plan as a first time buyer

  • Get yourself into financial order; know your financial position, your borrowing capacity and the lending policies of the bank in relation to different property types and locations.
  • Do your research; don’t buy the first property you look at. Understand the median apartment prices growth, vacancy rates, rents, employment statistics and demographics. Get to know the area, transportation linkages, and current and planned infrastructure projects.
  • Research the development team, who’s going to delivery this project? What’s the track record for the builder, developer, architect and sales agent? Go and visit some of the builder and developers recent projects.
  • Get proper independent legal advice from a specialist property lawyer before signing anything.
  • Understand the time frames around the delivery of the project and the sunset dates in the contract of sale.

Consider your possible risks

  • The project may not proceed.
  • The finished product may differ to what you anticipated.
  • Expected capital growth doesn’t eventuate or value may be less than purchase price.
  • You can’t physically walk through the property you are buying.

Source: http://www.realestate.com.au/blog/tips-for-buying-off-the-plan-as-a-first-time-buyer/

Our team of solicitors and conveyancers can tell you how to get started now. If you need help understanding the process or just have a general question, I’d love to support you. Feel free to book an appointment to come for a coffee (from our own in-house coffee shop, Recharge Espresso) and speak to one of our conveyancers (02) 4962 4440.

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