Hi, my name is Damian and this is the story of my life. I have been pretty lucky. I had parents who loved me and I went to a pretty good school and got a nice job. Last year, I married a wonderful woman. However, something was missing from my life. I realised that I didn't live in the kind of house I wanted to live in. I wanted a bigger house with a garden. And I wanted to own the house rather than renting it. I was put in contact with a real estate agent who really helped me to understand the housing market and he found me a great place and at fantastic price.
Off-the-plan properties are always trickier when it comes to securing financing because you end up signing the contract for a house that doesn't exist yet. While you're locking in a price now with the potential expectation of an upside in the future, you need to ensure that your bank or financier views your purchase in a favourable light. Follow these ways to maximise your chances of securing a loan for an off-the-plan property.
Research The Cost Of Other Properties In The Area
If you're buying off the plan in a particular area, chances are that other homes are coming up too – some of which may have already been sold. This is a good time to research the selling price of other properties in the area and discuss the cost with your financier or real estate expert. If the purchase price of your home is similar to other properties in the area, you're probably okay. But if your property somehow seems more expensive than others in the area, you could have trouble securing your required financing later, so watch out for this complexity.
Make Sure You Get Loan Pre-Approval To Increase Your Chances Of The Final Approval
Pre-approval or conditional approval for your loan is one of the best ways to be sure that you're likely to close the deal without any trouble during settlement. It's important to know that conditional approval does not guarantee the loan, but it does increase your chances of actually getting it when you need to settle. The pre-approval is based on a myriad factors, including your borrowing power, your expenses, your existing loans and your income.
Put All Your Documents In Order For Your Final Loan Approval
Several weeks before you're ready to settle on your off-the-plan property, you need to lodge an application for an unconditional loan approval with your lender. At this time, your lender will assess the value of the property, which is why it's important for you to have completed this research before making the purchase. In the event that the lender's valuation comes up short, you may have to cover the shortfall on your own. You can also get valuation comparisons from other lenders if you think that would help your case. Make sure your loan documents are in order to give yourself the best possible chance of securing the unconditional loan approval with no trouble.
Securing a loan for an off-the-plan purchase is slightly different because of the time between booking the property and settlement. These strategies will help you maximise your chances of securing the loan.