There is an increasingly popular trend of buying off-plan properties. If you are looking to buy a incredible new build in a desirable location, it is always the perfect chance to act fast and purchase your dream home.
This is our comprehensive guide to buying off plan properties: from the pros and cons to our top tips.
What is Buying Off-Plan?
Buying a property off-plan means making the purchase before the building has been finished.
This can sound incredibly risky but it does come with its advantages, such as being able to select your preferred plot and in some cases you may even receive discount. Additionally, purchasing off-plan can make the buying process feel very special and exclusive as you are the first resident and so can sometimes make your own personalisations to the home during the building process, such as fixtures and fittings to kitchen units.
Why Do Developers Sell Off-Plan Properties?
When a developer starts a new project, they initially don't have enough capital at the start of the project to fund it completely. Therefore, selling properties that they are building before their construction, allows for the development process to run much smoother and aids in paying for materials and wages. The signed agreements also act as physical evidence of interest and solid purchases in the development and so helps with the application for additional capital from banks.
Homeowners tend to want to see a tangible building and fall in love with the physical property before purchasing. Off plan purchasing tends to be very popular with buy-to-let investors who are more interested in buying new, low maintenance properties below market value in order to maximise profit.
The Pros of Buying Property Off-Plan
You often can get a discount on the sale price
These prices are often set a year or two before completion and so off-plan prices tend to be lower than what the property will be valued at upon completion. By getting in early you can make a big saving on the overall price. Additionally, if the off-plan price is cheaper then it immediately be worth more when you move in, allowing you to make profit on resale.
Everything is NEW
Just like the building itself, everything inside will come new too and most new builds will carry a 10 year warranty with them giving you peace of mind that your new home was built to last.
Many of the newer developments allow for you choose fixtures and fittings and in some instances furniture. From light switches to kitchen units, you are given the opportunity to make alterations and develop the design of your new dream home.
A major benefit is the fact that the house is ready to live in from the second you get your keys. Due to it being a brand new home, there is very little maintenance required and no need to redecorate (unless you really want to).
Cons of Buying Off-Plan Properties
Delays are Possible
If your building gets delayed, then you may have to reapply for a mortgage due to mortgage offers often only lasting 6 months. To avoid this, we would suggest looking for a mortgage provider with longer offer times or experience working with off-plan developments. Additionally, these delays may mean that the property value may alter or your financial situation may change and this can lead to issues with reapplying for the loan. This could mean you lose your deposit and can't proceed with the purchase.
Issues with Construction
There may be slight issues with the construction upon move in. It is important to check your home throughly upon move in and opt for reputable and trustworthy developer to limit this risk
If you move in at an early stage in the developments finalisation, it is possible that your new home may temporarily be surrounded by the construction site whilst the development is finished.
At Propuno, we exclusively use developers that are trustworthy and reputable to limit these risks and ensure we offer everyone the easiest and best possible experience in moving into their dream home.
The Process of Purchase
- Finding Your Property: The first step of this process is finding the property you wish to purchase. We sell properties in developments all around the world: Thailand, Spain and Dubai to name just a few of our locations. (It is a good idea to secure an offer in principle from a mortgage lender so you know you can borrow sufficient funds to afford the property. Also, make sure you have the money available to pay the deposit.)
- Reservation Deposit: This is a small fee that will be deducted from your deposit that will be paid on the exchanging of your contracts.
- The Legal Bit: You will need to appoint a solicitor, they will take you through the legal process of buying your property This process usually takes a matter of weeks.
- Arranging Your Mortgage: Unless you are purchasing your property as a cash buyer, you will need to arrange a mortgage. Purchasing a property abroad can complicate the mortgage process. To organise an overseas mortgage through a high street UK bank, you will have to deal with the foreign arm of their offices to arrange your mortgage. However, in countries further afield where they don't have offices is a more complicated process. It's possible to arrange a mortgage with an overseas lender using a specialist broker. These brokers can give you tailored information, including a list of estate agents or lawyers to use in your chosen country. Mortgage rates in some areas of the eurozone may be lower than in the UK, so you might get a better deal by borrowing abroad. It is worth noting that exchange rates will affect your repayments.
- Exchange Contracts & Pay Deposit: This process usually happens much faster than usual when purchasing new builds - usually within 28 days.
- Monitoring Build Progress: The next step is to wait for your new-build home to be finished. You should receive regular updates from your developer letting you know of the construction's progress.
- Completion: The developer will give you a completion date which will allow you to arrange the release of the keys and you can finally move in to your new home!
Here at Propuno, we have a passion for finding you the perfect development. Selling stunning properties all across the world, we only work with reputable and trusted developers who guarantee quality and beautiful properties.
Visit our property portal now to find your perfect home.