Loans for new home building in Alice Springs
When building a new home in Alice Springs there are many things to consider before applying for a loan. New home sales are back on the rise, fuelled in part by many investors and owner-occupiers buying off the plan. The concept is straightforward, you put up a deposit (usually 10%) to help the developer fund construction and then pay the balance when the build is complete.
Apartments are now being built at a rapid rate in capital cities and popular holiday locations, with developers being confident that property prices will rise, handing buyers a tidy capital growth when they eventually take possession. Developers sell off the plan to entice as many sales commitments as possible to then secure from their lender the finance they need for the build. Because buyers are essentially handing over their deposit for the promise of an apartment they won’t see for 1 to 2 years (or more), prices are set at current market rates with incentives often offered to entice buyers. This adds to the capital gain potential, but price rises are never guaranteed, as we have seen in past years.
In exchange for your deposit, the developer should provide a contract that outlines the details of your particular purchase, the completion date for the development and the deadline for when a decision must be made whether the development will go ahead. That decision usually hinges on whether sufficient finance has been secured. If the developer pulls the pin or passes the decision deadline, you should be entitled to a refund of your deposit, but this depends on the conditions of the sale contract, so it pays to read this document carefully and if required seek financial or legal advice. Full payment for the property is not required until settlement, which is usually one to three months post completion.
While buying off the plan looks great on paper and can reap rewards, getting in on the ground floor of a new development is not always a fast track to making money. Read our common questions for builders to see how you can make the most of the opportunity and avoid some of the common pitfalls.
Common Questions for Home Builders
One of the biggest advantages of buying off the plan is time. Unlike traditional property purchases with relatively short windows to round up the total finance, you will have at least 12 months, if not longer, to settle. Savvy buyers will take advantage of this extra time to save their pennies and reduce their borrowings.
Investments like this are big decisions, so investing in the right professionals to have onside before you commit is money well spent. Ensure you get professional legal advice on any contract before you sign it and that you speak with your financial advisor or tax professional to make sure you’ve got the right advice from day one.