Everything You Need to Know About Buying Off the Plan

Here’s what you need to know if you’re considering to purchase a property off-the-plan, including the benefits, considerations, and how to navigate the process.

Love the idea of moving into a brand new property? Purchasing off the plan can be a great way to secure a new home while getting your foot in the door of the property market.

With inevitable risks and attractive benefits, buying off the plan will suit some types of buyers more than others. If you’re thinking of taking the plunge with an off the plan property, check out our comprehensive guide to buying off the plan.

What Does it Mean to Buy Off the Plan?

Buying a property off the plan means you commit to purchasing a property before it’s been built, meaning you’ll need to wait for the house or apartment to be constructed before you can move in.

With this type of purchase, you’ll base your decision on the architectural plans and information provided by the property developer.

Off the plan purchases are common in new developments and high-growth areas, and often appeal to first-home buyers and investors.

How Does an Off the Plan Property Purchase Work?

An off the plan purchase is very different to buying an established property, as you’re agreeing to buy a home that doesn’t yet exist.

When buying off the plan, you’ll need to pay an upfront deposit, which is generally around 10% of the purchase price, and pay the remaining amount when construction is complete.

What to Consider When Buying Off the Plan

If you’re thinking of buying off the plan, there are a few key aspects you’ll need to consider:

  • Background research: You’ll need to delve into the details of the development and the developer’s history and reputation, as well as the area’s potential - such as growth trends, infrastructure developments and community amenities.
  • Contract insights: It’s important to understand all the clauses of your contract, especially those about timelines, variations, and what happens if the developer can’t deliver.
  • Financial preparation: Off the plan purchases require financial flexibility, so you’ll need to be sure your situation allows for this. Factor in potential changes in the market and your financial circumstances over the construction period.
  • Future value: While there's potential for the property's value to grow, be aware of market risks. The real estate market can fluctuate, impacting the value of your property by the time it's completed.

Benefits of Buying Off the Plan

Buying off the plan can offer a number of advantages:

  • Modern living: Brand new properties will often feature the latest design trends, contemporary layouts, and modern amenities. 
  • Input on design: Depending on the stage of construction, you may have a say in the finishes and features, allowing for a degree of personalisation.
  • Potential price growth: If the market conditions are favourable, the value of your property upon completion could be higher than the purchase price.
  • Incentives and savings: There are often financial incentives when purchasing off the plan, such as reduced stamp duty and tax benefits.

Challenges of Making an Off the Plan Purchase

However, there are challenges to be mindful of:

  • Delayed timelines: Unfortunately, construction delays are a common reality in off the plan purchases, impacting your moving or investment plans.
  • Market variability: A downturn in the property market could affect the value of your property upon completion.
  • Quality and specifications: There's a risk that the final product may differ from what was promised or expected.
  • Developer reliability: The project's success hinges on the developer's ability to deliver as promised.

Buying a property off the plan can be a smart choice, both financially and for your lifestyle. However, as with any property decision, this avenue requires thorough research, careful planning, and an awareness of the risks involved.

Once you understand the ins and outs of buying off the plan, you can decide if this option is the right one for you - and, if so, you can embark on your journey to become the owner of a brand new home. 

Keen to learn more about the home-buying process? Check out our other articles and stay in the know about all things home loans.

This article is intended to provide general information 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. Please consider seeking independent taxation and financial advice before making any decision based on this information.‍

Tax law is complex and subject to change. For the latest information, check the ATO website or with your accountant or financial advisor.

Unloan is a division of Commonwealth Bank of Australia is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Applications are subject to credit approval; satisfactory security and you must have a minimum 10% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000.

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.

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