Colliers International have produced a First Home Buyers Guide to buying off-the-plan in NSW. The guide has been published in an easy to understand format to help give first time buyers (FHB) the confidence to access all the help they might need to buy off-the-plan (OTP) and that information is readily available in a FHB friendly market.
The guide also summaries what assistance is available to an FHB and offers some sensible tips on how best to arrange finance and go about the buying process. My own personal point of view is that for some first-time buyers, a purchase OTP can look a little daunting and this is not the case and in reality, there are some advantages that the guide helps to highlight.
The guide also aims to build confidence with FHBs so that they can gain a clear understanding of how an OTP property can be purchased covering from first contact with the marketing agents up until settlement.
A Range of Incentives
A sensible starting point is to look at the range of Government Incentives that are available in NSW. Other states also offer similar incentives. The incentives come in the form of one-off grants and stamp duty savings and they apply, with price caps, to both new and established homes. First time buyers can also access up to $30,000 of super.
Various government web sites and the help of a solicitor are the best ways to make sure any FHB reviews all possible incentives.
There’s also a bonus in the current market as many private developers are also offering individual incentives linked to different projects, and again it’s wise to make sure any FHB does their research to see what’s on offer as they can be very valuable.
In combination the availability of government and private incentives is the ideal way to start the search for an OTF project that best suits anyone’s individual needs.
Another, and I think often over-looked advantage for today’s FHB is the choice of properties, projects and locations that are currently on the market. The number of apartments on the market is too often only characterized as a negative but, I suggest it’s just the opposite.
The amount of supply on the market and far less competition creates breathing-room for the FHB to find exactly what they are looking for in their first home. And there are lots of attractive new projects still selling off-the-plan that offer great flexibility, locations and facilities. Importantly they also cover a wide range of prices.
Despite some extra hurdles that any FHB might face in gaining a home-loan the mortgage market is also very competitive. In fact, more competitive than it’s been for many years and interest rates are part of that equation and they remain at historic lows.
However, home prices have become more affordable as a result of prices softening over the last 12 to 18 months. Our guide suggests creating a simple but realistic savings plan. And with some of the urgency gone from the market getting a 10/20% deposit now looks more realistic.
Today’s FHB should be assured that it’s never been cheaper to borrow money with lower rates making the repayments more affordable. However, loans are more difficult to secure. There’s a need to be realistic of how much debt you are comfortable with and can afford and that’s where a good mortgage broker will always be available to help an FHB understand their individual circumstances and borrowing capacity.
The Banks are taking a much closer look at every borrower’s living expenses because the banks are bearing a greater burden in responsible lending and this has caused the adoption of stricter lending criteria.
Why Any FHB Should Consider an OTP Purchase
Our guide pointes to a handful of key reasons and these include: a seven-year insurance term when buying new, the incentives already mentioned, the potential for capital gains and the freedom to choose colour schemes, some finishes and a variety of floor plans.
The purchase path is also easy. Most OTP projects are supported by extensive marketing material and a display apartment and sales centre are most often the foundation of this material.
The FHB can then have varied amounts of time to settle their purchase after the construction is complete. Prior to which a 10% deposit has been paid and after due process contracts have been exchanged. This can then create a longer time-frame to save additional money towards the purchase.
While I appreciate that some FHBs might think the price they pay could be eroded if prices fall, I suggest that with the right planning and research this is a small risk when weighed against the many advantages that are outlined in the guide.
Buying OTP plan is not a gamble, it’s a professional process where’s there’s lots of support and an FHB should take advantage of all of the help and assistance on offer and then concentrate on finding an apartment that matches their needs and finances.
First time buyers have borrowing options, access to incentives, the support of detailed marketing material, secure contracts, guaranteed building warranties and the advantage of wider-choice and all in a very stable market. It’s a range of circumstances that does not always exist in the market and the guide pin-points all of the details.
Along with the points covered in the guide, it helps to find an experienced mortgage broker who can help any FHB evaluate their individual circumstances.
While a reputable and professional real estate agent, marketing apartments, can help every buyer adopt a realistic target to buying OTP and so create a secure and exciting journey towards that first home.
The guide also details several valuable web sites that any FHB might use as background to the topics touched upon here.