Financial considerations when buying off-plan
Getting a mortgage
Before making an off-plan property purchase, you must know how much you can borrow on a mortgage. Here's a step-by-step guide to help you through the process:
Consult a Specialist Mortgage Broker: Speak with a mortgage broker who specialises in new builds and off-plan properties. They will have the expertise to navigate the specific requirements and limitations that might apply.
Understand Lender Limitations: Be aware that many lenders offer reduced loan amounts for new builds, and some might not finance off-plan purchases at all. A specialist broker can identify which lenders are open to working with such properties.
Evaluate Deposit Requirements: Even with a small deposit, getting a mortgage for an off-plan property is feasible. You might need to explore special schemes designed to help buyers with lower deposits.
Check Scheme Eligibility: Research schemes like those provided by government initiatives or specific financial institutions. These programs often cater to individuals who are buying new builds or off-plan properties. Eligibility for such schemes can significantly impact your borrowing capacity.
Use Online Calculators: Many mortgage lenders and financial websites offer online calculators where you can input your financial details to get a rough estimate of how much you might be able to borrow.
By following these steps, you can gain a clearer understanding of your mortgage options and how much you can borrow when purchasing an off-plan property.
Are off-plan properties cheaper?
They can work out cheaper thanks to the developer discounts of up to 5%.
Can you negotiate the price of an off-plan property?
Yes, as with any other property purchase, it’s possible to negotiate. Understanding the dynamics of the housebuilding industry can give you an advantage. Developers are often eager to sell properties off-plan since housebuilding is a cash-intensive business.
Recent market trends indicate that the level of off-plan sales has reached a decade-low. This downturn might work in your favour, as developers could be more willing to offer competitive prices to secure a sale.
To maximise your negotiation potential, consider the following tips:
Research market conditions: Understanding current trends and market data can provide leverage in your negotiations.
Know the developer's motivation: Being aware of the developer's need to sell can strengthen your position.
Be prepared to walk away: Sometimes, showing you have alternatives can prompt better offers.
Warranty and Insurance for off-plan homes
It's important to understand what new build home warranties cover and what they do not, to help you avoid any unexpected surprises. Additionally, we would recommend researching the types of insurance necessary for a newly constructed home, including what to look for in a policy.
Be insured for your purchase
Do you need an insurance quote for your off-plan purchase?
Do I have to pay stamp duty when buying off-plan?
There’s no difference to how much stamp duty you pay, whether you buy off-plan or otherwise. If you would like to calculate the stamp duty you will need to pay on your off-plan purchase you can use our calculator below.
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