7 Things To Know About Buying Off The Plan
Buying off the plan is a great way to get into the property market, but can also come with its own unique set of challenges. So, if you’re considering buying off the plan, it’s important to have a good understanding of what you’re getting into. In this blog post, we’ll cover 7 of the most important things to know about buying off the plan. We’ll discuss the pros and cons, what to look out for, and how to make sure you’re getting the best deal. So, let’s dive in and explore the ins and outs of buying off the plan.
Understand The Building Process
When it comes to buying off the plan, it’s important to understand the building process. The process can vary depending on the project, but in general, there are a few key steps you should be aware of.
The first step is the development approval process. The developer must submit a planning proposal to the local council for approval. The council will assess the proposal, take into account community feedback, and either approve or reject the application. This can take several months, so it’s important to factor this into your timeline when buying off the plan.
Once the development has been approved, the construction phase begins. This is when the developer will start developing the land and building the property. During this time, it’s important to keep tabs on the progress of the construction and make sure that the developer is staying on track. This is especially important if you’re buying a unit and the developer is building multiple units.
The next step is the final inspection. This is when the developer will submit the completed property for inspection by the relevant authorities. The authorities will assess the property and make sure that it meets all the safety regulations and building codes.
Finally, the property will be issued with an occupancy permit, which is the document that officially allows you to move in. Once you have the occupancy permit, you can move in and start enjoying your new home.
It’s important to be aware that the building process can be unpredictable and delays can occur. As such, it’s important to be patient and flexible when buying off the plan. It’s also important to understand the developer’s obligations and make sure they’re meeting them. Doing so will help ensure that you’re getting the best possible outcome from your purchase.
Know The Risks Involved
When it comes to buying off the plan, it’s important to understand the risks involved. Of course, there are rewards associated with buying off the plan, but there can also be risks. It’s important to carefully consider these before making any decisions.
First, you need to understand that the development may not be completed as planned. If the developer fails to complete the project, you may not get the property you had expected. This could mean that the property may not be the same size, type or quality as you had planned. You also need to be aware that you may not be able to get a loan to purchase the property if the development is not completed.
Second, you need to understand that the property may not be worth what you paid for it. It’s important to remember that off the plan properties may not increase in value as much as you expect. This means that you could end up with a property that is worth less than the price you paid for it.
Third, you need to be aware that there may be hidden costs associated with the development. It’s important to understand what the developer’s contractual obligations are and to be aware of any potential charges or fees that may be charged.
Fourth, you need to be aware that the development may take longer than expected. This can mean that you will have to wait longer than anticipated to move into your property.
Fifth, you need to consider the potential changes in zoning laws. It’s important to understand that the local council may change zoning laws while the development is taking place. This could mean that the development may not be completed as planned.
Sixth, you need to understand that the developer may not be financially secure. It’s important to do your research and make sure that the developer is able to complete the project.
Finally, you need to be aware that off the plan properties may be difficult to sell. It’s important to understand that off the plan properties may not be popular with potential buyers, and this could make selling the property more difficult.
It’s important to understand the risks associated with buying off the plan. You should do your research and make sure that you fully understand the potential risks before making any decisions. Make sure that you understand the development, the developer, and the local area. This will help you to make an informed decision and ensure
Research Potential Tax Benefits
When it comes to buying off the plan, it's important to research potential tax benefits. Buyers should consider the potential tax deductions associated with owning an investment property. These could include deductions for interest paid on the loan, the cost of preparing income tax returns, insurance premiums, and other costs such as body corporate fees.
It's also important to consider the tax implications of capital gains. Off the plan purchases are usually made with the expectation that the property will increase in value over time. When this happens, the sale of the property may be subject to capital gains tax, depending on how long the property has been held and the difference between the purchase price and the sale price.
It's also important to understand the tax implications of negative gearing. This is when an investor borrows more money than the property is worth, and the investment generates a loss. This loss can be used as a tax deduction against the investor’s other income. However, it’s important to note that losses can only be claimed if the property is rented out, and the rental income does not cover the costs of owning the property.
Investors should also consider the timing of their purchase, as different rules may apply depending on when the purchase is made. For example, if the purchase is made before 1 July 2017, then the investor may be able to take advantage of certain tax concessions.
Finally, investors should seek professional advice on tax matters from an accountant or tax lawyer. This will ensure that investors are aware of their tax obligations and that they are taking the most tax effective approach to their purchase.
Consider Appropriate Loan Options
When it comes to buying off the plan, it's important to consider your loan options carefully. There are a range of loan products available that could suit your needs, so make sure you do your research and get advice from a professional before deciding on a loan product.
The most common loan option for buying off the plan is a variable rate loan. Variable rate loans usually come with a range of features such as offset accounts and redraw facilities, allowing you to pay off your mortgage faster. Variable rate loans also generally have lower interest rates compared to fixed rate loans, so it could be the best option if you're looking to save on interest payments.
If you're looking for a loan with a fixed interest rate, you could consider a fixed rate loan. Fixed rate loans offer the security of knowing that your interest rate won't change for a fixed period of time. However, it's important to be aware that if interest rates drop during the fixed period, you won't be able to take advantage of the lower rate.
Another option to consider is a split loan. Split loans allow you to split your loan into variable and fixed interest rate portions, giving you the flexibility to benefit from lower variable interest rates while also having the security of a fixed rate portion of your loan.
It's also important to consider the fees associated with each loan option. Some lenders will charge an establishment fee, which is a one-off fee payable when you first take out the loan. Other lenders may charge an annual fee, which is a fee that is charged each year for the life of the loan. Make sure you're aware of any fees that may be associated with the loan product you are considering.
Finally, make sure you're aware of the repayment options available with your loan. Some lenders will offer weekly, fortnightly or monthly repayment options, while others may only offer one or two of these options. Make sure you choose a loan product that offers a repayment option that suits your lifestyle and budget.
By doing your research and considering all your loan options carefully, you can make sure you make the right decision for you when it comes to buying off the plan.
We understand you and we want to help
Buying off the plan can be a great way to get into the property market, but it is important to be aware of the risks and the things you need to consider before taking the plunge. At Ello Lending, we are here to help you navigate the process and answer any questions you might have. We want to make sure you get the best deal and the best outcome for your purchase. If you have any questions, don’t hesitate to contact us today. We look forward to helping you make the right decisions when it comes to your off the plan purchase.
