A step by step guide in buying Off The Plan as a first home buyer
Thinking about buying your first property? Use this simple step-by-step guide to take you from budget to buying a townhouse or apartment Off The Plan.
One of the greatest milestones in our lives is purchasing our first home. As a first home buyer in the current property market, getting your foot in the door can seem like a real challenge.
This is where buying Off The Plan (also known as OTP for short) can be a great option for a first home buyer. Buying Off The Plan can offer significant savings on things like stamp duty, potential repairs and utilities, with new OTP offering high energy efficient options.
Buying Off The Plan can be a little confusing and the process can take a little longer than you might think. Our guide will walk you through the steps to purchase your first home Off The Plan.
1. Set your budget
Before looking for the right property, you need a clear idea of what you have to spend. Start setting your budget by calculating your regular expenses and working out how much leftover disposable income you have. It’s also important to factor in the future costs you will have with a property like owners corporation fees, conveyancing fees, maintenance costs and rates.
Consulting a broker can be crucial here as they can help you determine your borrowing capacity and give you a clear idea of how much you are likely to be pre approved for with a loan. You might be surprised with the current record low interest rates how comparable a mortgage repayment is to your current monthly rental payments. You can then use online mortgage calculators to help figure out the potential cost of your mortgage repayments, and save, save, save.
Generally speaking, financial institutions expect you to have saved at least 10% of the value of the property you are looking to buy. This deposit amount can vary, so it’s worth checking with your Property Advisor or Sales Agent.
It’s worth considering the difference in repayments and interest rates with a 20% deposit over a 10% one. By aiming to save a 20% deposit you can avoid paying lender’s mortgage insurance (LMI) which can save you thousands. A larger deposit also means the banks will generally offer you a lower interest rate, or give you the opportunity to try and negotiate a lower interest rate.
2. Do your homework
This is where you need to get researching. Check property price growth in your preferred suburb, looking for planned developments or plans for future infrastructure in the area.
You should also begin looking into grants that first home buyers are likely eligible for. Some of these grants include:
3. Start shopping around
This is where you can begin to approach agents, scour the real estate lift outs and search online for properties within your budget.
As an early purchaser, you have the opportunity to get in on the ground floor (maybe literally!) and choose the apartment that best suits your personal preferences. This could include things like the aspect, floorplan, bedrooms, courtyard versus a balcony and more. You are also paying a fixed price for an OTP property, unlike at auction where a purchaser is likely to often pay more than the advertised sale price.
Once you’ve settled on the right apartment in the right development for you, it’s time to place a reservation. Generally speaking you can take the property off the market for 7 days with a reservation fee. The reservation fee is refundable if you change your mind, but once the contract is signed you are legally bound to proceed with settlement.
This can vary a depending on the project, so it’s worth speaking with your Sales Agent here. This is also where you and your solicitor can review your contract or sale and should ask any questions before signing on the dotted line. In some developments, this may be where you make decisions such as the colour scheme, or any new add ons or fitouts. Some developers are willing to cater to changes like whitegoods or even in some cases floorplan layout depending on the stage of the build.
5. Save, save, save
Buying Off The Plan means you can start with a smaller deposit upfront, leaving you with more time to save up a healthy buffer whilst construction is underway.
It’s worth checking in with your lender or financial advisor to check that you are on the right savings track to maximise your down payment during the build.
The development is underway and your Off The Plan property is soon to be a real home. A customer service representative should keep you informed of what stage the building is now at.
A few months prior to completion will be the added paperwork such as a handover inspection and guide to the building and its facilities.
Settling a property can be an exciting yet daunting experience. Organise constant communication between your solicitor, mortgage lender and the Off The Plan developer to ensure a seamless process
Pre-settlement refers to the time after your apartment is finished, and before you move in. This is where you can inspect and point out any defects or issues. Once finalised the settlement begins.
Your property is finished, your loan is approved and your solicitor (or conveyancer) and mortgage lender have all spoken and liaised to arrange settlement and payment of the outstanding purchase price balance.
You get the keys and all that’s left to do is move in and enjoy your new home
Finding the right Off The Plan home for your situation can be challenging. At Amity, we have an experienced Melbourne team working to find and sell the best properties for your budget and lifestyle. For help contact the team at Amity on 03 9090 2500 or email firstname.lastname@example.org.
14 July 2021 News