Off the plan w/o finance pre approved (10 months)

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thinker
Member
@thinker
Join Date: 2005
Post Count: 29
September 19, 2007 - 9:45 am
Hi all,
Just a question – I am thinking about buying an off the plan property townhouse. It will be ready in somewhere around 10 months.
I am refinancing at the moment and will have enough equity for a 20% deposit… However, I probably need to make an offer before sorting all of this out. Am I putting too much on the line by not getting pre-approved finance? Is this normal or am I being a bit mad?
There aren't any issues with serviceability.
C.
rudolph
Member
@rudolph
Join Date: 2003
Post Count: 23
September 19, 2007 - 9:24 pm
Hi Thinker
Personally I would be looking for an off the plan in a high growth area in a small lowrise complex that will be ready in 18+ months. Held with a deposit bond. In doing it this way you can then get revalued before settling which would hopefully have increased in value so that you will need little or none of your own money to settle.
This leaves you with more capital to spend.
Rudolph
L.A Aussie
Member
@l.a-aussie
Join Date: 2006
Post Count: 1,488
September 19, 2007 - 11:01 pm
Make sure you compare the O.T.P to recent sales of similar EXISTING townhouses in the immediate area to verify that you are paying the right price. Look at townhouses around 5 years old or newer to get a good idea.
Many O.T.P properties are price-loaded to cover the developer's margin, thus they are over-priced compared to the market.
Many people say; "but how can you compare it if it hasn't been built yet?"
Well, if your place was built, and you had to sell straight away for whatever reason, then you will only be able to sell it for the same price as the existing comparables.
Make sure you are not paying tomorrow's prices today.
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
September 20, 2007 - 3:34 am
a pre-approval will generally only be valid for 3 months. You will need to apply again anyway so why not save your credit record from another enquiry you won't be proceeding with and jsut ask a broker it you meet the requirements. That is no guarantee you will get the loan in 10 months time, as serviceability and circumstances change, but it will be a good guide.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au