Buying a property off the plan has great advantages but also sometimes not be the best way to purchase a property.
Many new home owners like the opportunity to be able to influence the fittings, fixtures, tiles, floor plans, carpet etc and making your own choices is very desirable.
Another bonus is you do not have to settle until the property is completed, and this could be in a year or even two. You will be required to provide the 10% deposit at exchange and then set and forget until completion.
However, there are other contingencies you should consider: what if your personal circumstances change? Your income level changes due to redundancy or restructuring of the company or if you are self employed, another competitor comes into your market space and takes business from you. This means you may not have the same income to service your mortgage. Once you have signed you cannot back out without losing your deposit and even then the builder could sue you for not completing the transaction.
The market could change – a property valued at $500,000 could in 24 months drop by $100,000 and therefore the banks would not give you the full committed amount at settlement as banks prior to lending money will do an independent valuation.
There is a ‘shrinkage’ clause in most contracts that allow the builder to shave up to 3% from the footprint. When you are buying a property based on value per meter losing 3% can devalue the initial price of the property.
So the bonus is, if you are buying off the plan for a home to live in you get to choose your home interior to your liking, however if you are buying for an investment reason it may be wiser to purchase bricks and mortar already built.
As always seek professional advise when making any decision to buy a property.