Off the plan purchases are really popular among investors. Purchasing a property before it is built can save investors money, and they may even see a return on investment before they even rent it out.
Who can benefit?
Not everybody should buy an off-the-plan property because there are some risks associated with these properties. In general, banks and other major lenders are likely to approve loans for the following types of borrowers:
- Investors with a high net worth
- Homebuyers purchasing a second home
- Borrowers with a deposit greater than 20% who have a high income
If you are interested in applying for a construction loan, you may qualify if you meet specific criteria. You can work with a broker to determine your eligibility. If you’re a first-time homebuyer, you may also be eligible for a First Home Owners Grant. For any homebuyer, it may seem frightening to buy a property in Canberra or an ACT leasehold, especially if it is your first home. Working with an experienced mortgage broker can help make the process less daunting. Mortgage Street is a non-bank lender, and our team of brokers can help you find a home loan with the best rates. If you are considering buying in Canberra, our mortgage experts can get you approved for a home loan.
Application Basics
If you apply for a home loan for an off-the-plan property, you should petition for a formal approval with less than three months remaining until the settlement date. When assessing your loan application, banks will use the projected market value of your home to make final loan determinations, such as your loan to value ratio, the premium for your lender’s mortgage insurance and the amount of your loan. Banks and traditional lenders tend to have loan limits for off-the-plan properties because of property value discrepancies. As such, you may only be able to borrow 80% of the property’s value.
Tips
If you are planning a purchasing an off the plan property, here are some tips to strengthen your loan application:
- Save as much as you can before the settlement date. Your lender doesn’t care about your financial situation when you signed the contract, so saving money before the settlement is the best way to show lenders you are in a secure financial position.
- If you can’t afford a larger loan deposit, consider finding a guarantor.
- Keep your financials up-to-date so the bank can verify your income.
- Regularly pay back your bills, including rent and debt, to avoid lowering your credit score.
When purchasing a property off the plan, you must work with an experienced mortgage broker. Mortgage Street and our team of brokers specialise in securing home loans that banks consider risky.