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Buying a home off-plan explained

Posted March 27, 2024
Buying a home off-plan explained

Buying a home off-plan means you agree to purchase it before it’s fully constructed.

You choose to buy based on the building plans and designs. First, you pay a deposit, then continue with more payments as the construction progresses. This method can save you money and be an excellent investment. Yet, there are risks like delays in building or changes in the property market.

For first-time buyers, getting a property off-plan is an exciting chance. It allows you to own a home that might be cheaper and designed to your liking.

It’s important to understand both the advantages and the potential risks involved in buying a new home off-plan.

Why buy off-plan?

  • Properties are often cheaper when bought off-plan. Early buyers can enjoy lower prices and might see their property’s value go up by the time it’s finished.
  • You might get to choose finishes, fixtures, or even change the layout of your unit. This makes your living space more personal.
  • Your home will have new fixtures and fittings, materials and amenities.
  • Developers often provide special deals to attract early buyers. These could include price discounts, covering legal fees, or offering better finishes without extra charges. Such incentives can lead to significant savings and added value for first-time purchasers.
  • If the area where you’re purchasing a property is going to grow in terms of infrastructure, amenities, or popularity, your property’s value could rise significantly by the time it’s built. This means you could see a great potential return on your investment.

Things to think about

It can take months, or even years until your new build home is ready. For those eager to move in soon, this wait is a big deal.

Check if the developer has an excellent track record and solid finances. This could avoid losing your investment if they face money troubles.

Mortgages for off-plan properties can be complex as offers may expire before completion. You’ll likely need to reapply or extend your mortgage offer as you get closer to moving in.

Remember that the market value of your property could go up or down during construction. While an increase is great, there’s also a risk that its value could drop below what you paid.

Buying off-plan requires imagination and trust in what the developer plans to build, since you cannot see or touch the actual property yet. There may be differences between what you expect and what is eventually built.

The property market can change because of economic trends, interest rates, and government policies. A downturn in the market could affect both your property’s worth and its attractiveness.

There is always a risk that the finished quality might not meet your expectations. Ensuring new build warranties are in place is crucial. A warranty on a new build home can provide protection against poor construction work.

How to buy a property off-plan

  1. Know how much you can spend and secure a mortgage agreement early on if needed.
  2. Research the developer’s past projects and read reviews from other buyers.
  3. Reserve the home, you will usually need to pay a fee.
  4. Hire a solicitor who knows about buying off-plan to help with contracts and protect your interests.
  5. Examine the floor plans and specifications closely. You should determine exactly what will be provided.
  6. Inspect the property once it’s almost done so the developer can fix any issues. Do one last check before completion to spot any problems under snagging provisions, then settle any remaining payments when satisfied with everything.
  7. Keep in touch with developers during building works so any issues can be quickly addressed.

Tips for first-time buyers buying off-plan

Remember additional costs like stamp duty or furniture expenses beyond just purchase price.

Research your financing options as mortgage offers vary, especially with construction timelines; look into lenders familiar with off-plan purchases.

Consider the location thoroughly, investigate future developments in the area as these can impact their value.

Buying off-plan offers perks like customisation options, better prices, and owning something completely new. It can be ideal for first-time buyers, but it comes with risks such as delays or financial instability from developers; being well-informed helps make sure you’re making a smart choice about where you want to live next.