top of page
Writer's picturePeter Esho

A Comprehensive Guide to Buying Off-the-Plan and Avoiding Common Loan Mistakes

Updated: Aug 14

Purchasing a property off-the-plan can be an exciting yet daunting prospect. The allure of securing a brand-new home or investment property, often at a lower price, is appealing to many. I’ve been working in the brand-new property space since 2015, and I’ve learnt that many of the risks that come with off-the-plan can be mitigated. 


At Esho Capital, we specialise in helping professionals secure the right financing for off-the-plan purchases, and in this guide, we'll walk you through the key steps to successfully buying off-the-plan while avoiding common pitfalls.


Understanding Off-the-Plan Purchases

When you buy a property off-the-plan, you're essentially purchasing a property that hasn't been built yet. You're committing to a contract based on the developer's plans, renders, and marketing materials. These are call unregistered plans. When the property is complete, the plans will become registered. The final product can differ slightly from what you envisioned, which is why it's crucial to thoroughly understand what you're signing up for.





The Advantages of Buying Off-the-Plan

1. Potential Capital Growth: One of the biggest attractions of buying off-the-plan is the potential for capital growth. By the time the property is completed, its value may have increased, providing you with instant equity.


2. Stamp Duty Savings: In many Australian states, buying off-the-plan may entitle you to significant stamp duty concessions or exemptions, especially if you're a first-home buyer.


3. Customisable Options: Developers often offer buyers the opportunity to customise certain aspects of their property, such as finishes and fixtures, allowing you to tailor your home to your preferences.


4. Extended Settlement Period: Off-the-plan purchases typically have longer settlement periods, giving you more time to save for your deposit or arrange your finances.


Common Mistakes to Avoid When Buying Off-the-Plan

While there are clear advantages, buying off-the-plan also comes with risks that must be carefully managed.


Here are some common mistakes to avoid:


1. Not Securing Financing Early:

   - Obtaining a loan for an off-the-plan purchase can be more complex than for an established property. Lenders may be more cautious due to the inherent risks involved. At Esho Capital, we specialise in securing competitive off-the-plan loans tailored to your needs. Most bank pre-approvals only last 90 days, which is often a lot less than the time for construction on your new home to complete. That is why we have a unique approach which can give you more certainty and assurance that you are doing everything that is right to ensure you are best placed to settle when your home is complete. It’s crucial to work with our team on financing early in the process to avoid any last-minute surprises.


2. Failing to Research the Developer:

   - It's essential to thoroughly vet the developer's track record before committing to an off-the-plan purchase. Look into their previous projects to see if they were completed on time and to the promised standard. Check for any legal disputes or financial issues that could jeopardise the project's completion.


3. Overlooking Contract Details:

   - The contract of sale for an off-the-plan property is often lengthy and complex. Pay close attention to clauses related to completion timelines, any potential variations in the final build, and your rights if the project is delayed or not completed as promised. It's advisable to have a solicitor or conveyancer review the contract to ensure you're fully protected.


4. Ignoring Market Conditions:

   - Property markets can fluctuate, and what seems like a great deal today may not hold the same value in a few years. Consider the current market trends, potential future developments in the area, and economic conditions that could impact property values.


5. Underestimating Additional Costs:

   - Beyond the purchase price, there are additional costs associated with buying off-the-plan. These may include strata fees, council rates, and other ongoing expenses. Ensure you budget for these costs and consider how they might affect your overall investment.



Steps to Successfully Buying Off-the-Plan

1. Do Your Homework:

   - Research the location, developer, and market conditions thoroughly. Visit the site if possible, and consult with property experts to gain a better understanding of the project's viability.


2. Get the Right Advice:

   - Engage a qualified solicitor or conveyancer who has experience with off-the-plan contracts. Their expertise will be invaluable in ensuring your interests are protected.


3. Secure Your Financing Early:

   - Work with a mortgage broker or lender who understands off-the-plan purchases. At Esho Capital, we offer specialised services to help professionals secure the best loan options for their off-the-plan purchases.


4. Stay Informed:

   - Once you've committed to the purchase, stay in regular contact with the developer and keep an eye on the project's progress. Any delays or changes should be communicated to you promptly.


5. Plan for Settlement:

   - As the completion date approaches, ensure all your finances are in order, and you're ready to settle. This includes finalising your loan and preparing for any additional costs. When working with Esho Capital, our team will hold your hand throughout the entire process. 


Conclusion

Buying off-the-plan can be a rewarding investment, but it's not without its challenges. By doing thorough research, securing the right financing, and avoiding common mistakes, you can successfully navigate the process and enjoy the benefits of owning a brand-new property. 


At Esho Capital, we're here to guide you every step of the way, ensuring that your off-the-plan purchase is a smooth and successful one. Contact us today to learn more about how we can help you secure the right loan for your off-the-plan property.

Comments


bottom of page