Buying off the plan

Buying off the plan could help you lock in a winning price and perhaps even save thousands on stamp duty. But there are also pitfalls for the unprepared — so do your homework before you sign.

If you’re in the market for a brand new home, then it could be worth considering buying off the plan — which simply means buying a property that is not yet complete. Here are some of the reasons it can make sense:

  • Lock in a price.

By buying now, you can buy tomorrow’s property at today’s prices — so if the market rises, your price is locked in.

  • Get more time to save.

Instead of a cash deposit, many developers will take a deposit bond, which allows you to buy now and pay later. So you’ll have extra time to save or sell you current home.

  • Get a helping hand from the government.

Most state governments provide incentives for people buying off the plan, especially first home-buyers — either lower stamp duty concessions, home-buyers’ grants, or a combination of the two. To find out what’s on offer in your state, contact your local Office of State Revenue.

  • Add a personal touch.

With your new property still under construction, you may get a say in finishes, fixtures and other design features. So you’ll have a home designed to your personal specifications, without the bother and expense of renovating.

What to watch out for

Those are the advantages — but there can also be drawbacks. The most obvious is that you don’t have the opportunity to walk through your property before you buy it, so you can never be quite sure what you’ll get until it’s complete. Sketches, models and computer simulations are great, but they’re no substitute for the real thing.

Then there’s the financial side. If the housing market and interest rates move the wrong way, your house could end up being worth less than you expected when you move in. And if construction is delayed, your property may not be ready on time, which could be expensive if you need to find somewhere else to live in the meantime.

Remember to make sure that your contract has penalties for late completion, as well as stating clearly that the seller must fix any defects.

Do your homework

You’ll want to ensure the builder has a good reputation. Check their history and ask to see other examples of their work. Go through the contract with a solicitor to make sure you’re protected if things don’t go to plan (it does happen).

Also find out:

  • Whether you can visit the construction site.
  • What happens if construction is delayed or finishes early.
  • Whether you can get your deposit back if the building doesn’t go ahead.
  • If you can choose appliances and fittings.
  • If you can resell the property, or on-sell it while it’s being built.

Find out more about our home loans services, or talk to your Commonwealth Bank home loan specialist about finance before you buy. We can help you explore the options and find the best way to fund your new home, so you can buy with confidence.

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