Is buying an off the plan apartment a good plan? We’ll help you make up your mind.
Whether you’re interested in a property for investment, are a first home buyer or simply looking for an upgrade, off the plan apartments can be an appealing choice.
However, it is important to not rush when making a decision, as this is a massive purchase which needs research, knowledge and consideration.
Yes, you will be enticed by the impeccably designed brochure given to you with beautiful pictures inviting you into these luxurious homes with state-of-the-art appliances and facilities. However, it is important to look beyond these features and not be swayed immediately.
Is buying an off the plan apartment in Sydney the right move for you? Here are some factors you should consider before making a decision that can have a huge impact on your life.
Off the plan: Buy now, pay later
One of the benefits of buying an off the plan apartment is the smaller upfront payment required. Usually, a ten-per cent deposit is needed, without the entire payment required until the development is completed.
This is a popular choice for investors as they don’t want to put up large amounts of capital right away. It is also beneficial for first home buyers who want the time to save more money resulting in a smaller home loan.
Although you only need a small deposit, it is important to remember that you are still tying up your borrowing capacity, and your bank account may not provide you with any additional loans for other investments during the construction period.
Off the plan means incentives
With off the plan apartments, come incentives. A little encouragement to choose an off the plan design.
Buying a property comes with many other costs aside from the sale price. Different states have different incentives, so it is a good idea to check them out before making a decision.
Some incentives include government stamp duty concessions on new developments which can save you tens of thousands of dollars when compared to buying an already established home.
Other incentives include the first home owner grant, which is relevant in NSW. This provides homeowners with a grant of up to $10 000 for new homes. However, there are certain rules and regulations that must be followed.
With off the plan comes risks
Buying an off the plan apartment is not as appealing as it may sound. There are some negative aspects to off the plan apartments in Sydney that you will need to be aware of. The glossy brochure that the developer gives you doesn’t say it all. These artist impressions can be quite deceiving.
This is why it is important to undertake research on the developer, architect and builder as well as check out other projects they have worked on to see if there were any problems, defects or quality issues.
Often these display suites are impeccably presented, providing you with a distorted reality on what you are actually going to receive.
There is also the risk of the market dipping or an oversupply of stock through other developments in the area.
This can mean the value of your property will be worth less than what you are paying for. This will have a major impact on your ability to secure finance, which is why it is important to check with your council to see what other developments in your area are pending/approved.
Off the plan apartment contracts also often have special conditions which allow developers to cancel the contract under certain conditions, which can, in turn, leave you property-less.
Key factors to consider
- Check out the developer and make sure you read reviews, view past and present projects and investigate their record
- Check out the contract and make sure to seek legal advice before signing the contract
- Pre-inspection is crucial before the settlement of a property
Considering an off the plan apartment in Sydney as your next purchase?
Make sure you have taken the time to do some research and ask for advice before signing your contract.