Should I buy off the plan or an established property for my first home?


Let’s look at the opportunities and risks.

I’m a bit biased but I just love Nat Stevens clear articles and her website for demystifying building a home. Building a home de-mystified.

Heres my take.
Possible opportunities when you buy off the plan:

  • You can lock in a set price – You will pay the current market price for a property, even though it will be completed in the future.
  • Initial low capital outlay While a deposit is made to secure the property (usually 10%), the entire payment doesn’t need to be paid until the property has been built. You have time to organise your finances, save more and or sell an existing home.
  • The property value could increase – The property you purchase off the plan may increase in value when you settle two years later.
  • Tax advantages – If purchasing for investment purposes, you may be able to claim depreciation on your tax for items like fixtures and fittings. Consulting your Accountant to find out if you are eligible is vital.
  • Possible stamp duty savings – Bonuses and reductions in stamp duty for buying off the plan which can save you thousands of dollars are offered by some State governments.
    • Seven-year builders guarantee –* 7-year builders guarantee applies, which means structural or interior building faults must be repaired by the builder for all newly built properties in Australia.

Potential risks to buying off the plan:

  • Falling property market – You may pay too much for a property if the market falls between the exchange of contracts and building completion. If this does occur you may find it difficult to secure finance for the full amount.
  • Failed expectations – It’s not what you thought when it is finished. As many builders do not allow you to see the property until construction has completed, there is a risk that what you thought you bought is not what you will receive. Workmanship may also be an issue and your standards may not be met.
  • Rising Interest rates – Interest rates changes could occur before you settle on the property affecting your ability to meet the repayments.
  • Bankruptcy – The developer could go into liquidation before the project is completed. You need to ask what the options are if this occurs; will you get your money back and what guarantees do you have?
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I recently helped my daughter and her partner buy a unit off the plan. This option has some good things going for it as explained by Julie. It also forces you to save but with a tangible result…you see your place getting built as you save. Pretty cool right? Watch out for builder packages and promotions too. For example, Metricon’s current promo is interesting - only $5000 gets you started. Take a look here.



Interesting, thanks for sharing the link Lisa

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