Is Buying Off Plan Cheaper? A Comparative Analysis

As an expert Australian mortgage broker specialising in financing off-the-plan property purchases, we've often been asked if buying an off plan is cheaper. This post explores this topic in detail by conducting a comparative analysis, looking at various factors that affect the cost of purchasing property off the plan.

What is an Off-The-Plan Property Purchase?

Before we delve deeper into our comparative analysis, let's first understand what it means to buy property off the plan. Essentially, this is when you purchase a property before it's built or while it's still under construction. You make a commitment based on the developer's plans and specifications rather than the finished product.

This can be an attractive option for some buyers, as it often comes with certain benefits, such as potential discounts and tax incentives.

Price Comparison: Off-the-Plan vs. Established Properties

One of the most significant factors to consider when comparing the cost of off-the-plan properties with established ones is the initial purchase price. Off-the-plan properties can be more affordable for several reasons:

• Developers may offer discounts or incentives to attract buyers and secure funding for their projects.
• There's an opportunity to lock in today's prices, potentially saving you money if property prices rise before the project is completed.

However, it's crucial to keep in mind that the lower initial cost doesn't necessarily translate into long-term savings. Factors like market conditions, construction quality, and other unforeseen expenses can impact your overall investment.

Government Incentives and Tax Benefits

Another aspect to consider when comparing the cost of off-the-plan properties is the various government incentives and tax benefits available to buyers. For instance, first home buyers may be eligible for the First Home Owner Grant (FHOG) or stamp duty concessions on off-the-plan purchases. There's a more detailed explanation of the government grants available in this post.

Additionally, purchasing off the plan may also offer potential tax benefits, such as claiming depreciation on the building and fixtures. These benefits can reduce your overall investment cost over time.

The Risks of Buying Off the Plan

While there are potential cost benefits to buying off the plan, it's essential to weigh these against the inherent risks and uncertainties associated with this type of investment. Some risks include:

• Delays in construction or project completion
• Changes in market conditions that can affect property value
• Quality concerns due to unforeseen construction issues

It's crucial to carefully research the developer's track record, project specifications, and market conditions to mitigate these risks.

Financing An Off-the-Plan Property Purchase

One of the most critical aspects of buying off the plan is securing finance for your purchase. Lenders may have different policies and requirements for off-the-plan purchases, which can affect your borrowing capacity and loan terms. It's essential to work with a mortgage broker (like Ello Lending) to find the right loan product for your needs and circumstances.

So, is buying off the plan cheaper?

The easy answer is: it depends.

While there are potential cost benefits and tax incentives associated with purchasing off-the-plan properties, it's essential to weigh these against the inherent risks and uncertainties.

Each buyer's circumstances are unique, and what may be cheaper for one person may not be the same for another.

The truth is, yes it's possible to save a substantial amount of money buying off the plan. These savings generally match the extra effort and research you put into the purchase though.

We think it's important to remember that when you buy a property off the plan that you're also buying a property that's exactly what you're after. In many cases right down to the colour and specs of the wall outlets. There's real non-dollar value in that.

At Ello Lending, we understand the process of buying off the plan and we'd love to help you.

We're committed to helping borrowers navigate the complexities of financing off-the-plan property purchases. With our extensive knowledge of the Australian property market and our expertise in mortgage brokering, we can guide you through the process and ensure that you find the best loan product tailored to your needs.

Our friendly and professional team is here to answer any questions you may have and provide the support you need to make informed decisions about your investment. Whether you're a first-time buyer or an experienced investor, we're here to help you achieve your property goals with confidence and optimism.

If you're considering buying off the plan or simply want to learn more about your financing options, feel free to reach out to Ello Lending.