Buying your first property will always be an equally daunting and equally liberating experience. The mix of emotions surrounding whether you’re making the right decision, and the joy of being able to participate in the Australian dream, is something every first time home buyer experiences. But, that feeling is unique in NSW – especially Sydney.
Sydney’s property market is notoriously expensive and what some might say is a market that favours investors. But, first time home buyers have an opportunity to gain prime real estate in Sydney by purchasing off-plan apartments and homes.
Purchasing An Off The Plan Home: All You Need to Know
Purchasing your first home is a considerable step. By buying an off-plan home, you’re able to simplify the process, so it makes better financial sense both immediately and in the long term.
To understand why you should consider buying off-plan property in Sydney, you must first understand the benefits of off-plan property ownership.
4 Benefits of Purchasing An Off The Plan Apartment in Sydney
1. Payment Flexibility
Off-plan properties have some of the most flexible payment structures for home buyers. This is evident in the three segments of the deal:
- Reserve fee (usually $5,000) to reserve the property
- 10% Down payment with 7 to 14 days after reserving
- Balance of property cost at settlement or 12 months after paying your down payment, whichever is soonest.
These amenable, more manageable payment options, enable you to make a move on the home you want and give you time to get your finances in order.
2. Defer Transfer Duty
In Sydney, there are specific rebates for off-plan property. In fact, homebuyers can benefit from deferring their transfer duty by 12 months if they intend to use the property as a residence.
3. Plenty of “New Home” Incentives
In NSW, there are specific rebates when purchasing an off-plan property (new home).
In fact, homebuyers can benefit from deferring their transfer duty by 12 months if they intend to use the property as a residence. Additionally, first time home buyers in NSW who are purchasing a new home may be eligible to forego transfer duty and receive a $10,000 grant as part of the First Homeowners Grant.
4. Safeguard Your Investment
Are the horror stories you hear about developers running off with money true or an urban legend? It’s most likely the latter. If you’re considering buying an off-plan apartment in Sydney you are most likely one of the most protected homebuyers. Because your instalments and off the plan deposits are kept in a trust or controlled money account which the stakeholder cannot release to the vendor until settlement.
The Process of Buying An Off-Plan Home in Sydney
1. Determine Your Budget
Carefully consider your finances and what you can comfortably afford to repay each month. This will give you a better understanding of what sort of off-plan properties you can pursue.
2. Choose Your Plan
This is the most exciting part of the process. Most developers will have a 3D rendering or comprehensive brochure that can give you an idea of what the apartment layout will be, the amenities it will have, in addition to the benefits of that particular off the plan apartment. Armed with this information, you can confidently determine whether or not an off-plan property is ideal for you.
3. Pay Your Holding Deposit
You’re excited about an off the plan apartment. You’ve seen the location, and the price, size, and amenities are perfect.
To ensure other interested buyers won’t take your apartment, you will be required to pay a $5,000 holding fee.
4. Contact A Solicitor
The only complicated part of purchasing an off-plan property in Sydney is the paperwork. For that reason, it is crucial that you are in constant contact with your solicitor who’ll help you understand, but also ensure you get advantageous terms.
5. Pay Outstanding Down Payment
Once you sign the contracts, you’re liable to pay the 10% down payment, minus you earlier $5,000 deposit.
6. Apply for Tax Rebates, Incentives, and Grants
As I mentioned earlier, first time home buyers have a plethora of incentives and rebates that they can access to lessen the financial burden of buying a home. Now is the time to discuss which incentives you would qualify for with your agent, and begin applying for them.
7. Complete Pre-Settlement Inspection
A pre-settlement inspection gives you peace of mind.
It’s always good practice to complete a pre-settlement inspection when you purchase a home. For off the plan apartments, this is especially true because you haven’t had the opportunity to see and inspect the apartment before. During this inspection go through a list of your special conditions, and inspect aspects like damage, plumbing, electrics, etc. Complete this inspection with your solicitor to ensure everything is on par with what you and the developer agreed to in your contract.
8. Conduct A Lender-Required Valuation
After completing all the aforementioned steps, the time comes to appease your lender so they’ll release the loan to the vendor. Because your home loan is conditional on the valuation of your home, banks are obligated to conduct evaluations to determine the value of the property. If all goes well, you’ll receive the loan and are now free to move into your new home.
What Buying Off-Plan Property in Sydney Means in The Long Term
There’s a certain level of uncertainty surrounding whether or not off-plan properties are worthwhile. Because purchasing a home is not a short term decision, you need to examine the long term ramifications and benefits of buying a home.
Buying an off-plan property in Sydney – especially as a first-time buyer – is a smart move. Whether you feel that your off-plan property will be your forever home or a step in the door in a competitive and uncertain market, you’re going to see long term value. Because besides the likelihood that your off-plan home will increase beyond its initial value, it will have other financial benefits. One of those financial benefits is lower power bills. Because all off-plan homes in Sydney need to meet a higher energy code, buyers are guaranteed to make energy savings.
Besides, the average constructed apartment price is $1.1 million in Sydney, whereas you can find off-plan properties for far cheaper, that offer far more amenities than older apartment blocks and homes.