Types of property to buy: Buying off the plan
About the Series
The first in our series on buying different types of property looks at what home buyers should think about when buying off the plan.
When you're thinking about buying a property, we know you want to make the best financial decision possible.
But could it make sense to buy a property that doesn't exist yet?
Different properties suit different buyers, and if you don't need to move into your new home right away, or are looking to buy an investment property, buying off the plan could be worth considering.
With our recent housing affordability index showing it's now 10.8% more favourable to buy now than it was a year ago, it might be a good time to purchase a property.
We take a look at what's involved in buying off the plan.
What makes off the plan different?
- The obvious difference is that you are buying a property that doesn't exist yet. With the help of detailed drawings, models and perhaps a display apartment, you will need to imagine how your purchase is going to look. The upside of this is that you might get to have your say in fixtures and finishes.
What about financially?
- Financially, buying off the plan is different to buying an existing dwelling. Firstly, you will be paying today's prices for a property that will not be complete for possibly a year or more. If the market goes up, so might the value of your investment (and vice versa).
- When paying a deposit on an off-the-plan property, some developers might take a deposit guarantee instead of a cash deposit. This means that no money changes hands until settlement (giving you more time to save).
- You won't start making loan repayments until after settlement, which could be a year or two down the track.
- Most state governments offer incentives for buying off the plan. Contact your local Office of State Revenue to find out what applies in your area.
What else should you consider?
- As with any property purchase, do your due diligence: research the area, the demand for this type of property, rental demand and return, and so on. You can also find about recent sales, past sales history and current property listings using our Property Guide App.
- Depending on whether you are buying a place to rent out or to live in, ask yourself if the property is going to be compatible with what tenants want, or with what you as a homeowner want.
- Ensure you have a solicitor go through the contract to make sure you are protected in case the development doesn't proceed or there are delays or defects.
- Getting in early could mean you get the pick of the apartments on offer.
Buying off the plan? Speak to one of our lending specialists today.
This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Commonwealth Bank of Australia ABN 48 123 123 124.