iBuyNew’s CEO Mark Mendel has been featured in Property Observer this week talking about how lending laws actually affects off the plan buyers.
By not having funding pre-approval which lasts right until settlement, this could prove costly for off the plan buyers, particularly for thousands of Victorian buyers.
Many Victorians who bought off the plan apartments scheduled to complete this year could lose their deposits due to new apartment design standards being introduced from March 2017.
The big four banks (NAB, CBA, ANZ and Westpac) have made a new policy in line with these new standards and will no longer lend to purchasers of one-bedroom apartments smaller than 50sqm.
Mendel states that “the situation is unfair as banks had applied different standards for the developers of the apartment projects.”
He continues, “If banks are prepared to fund a development for construction then they should take the same stance on providing finance when it comes to the buyers of those off-the-plan apartments.”
Many of the Melbourne apartment developments due to complete this year were designed in 2014 or prior and these new design guidelines were not even announced back then.
Instead of refusing to lend to these property buyers, the banks should be offering to fund buyers of these apartment developments under the same policy that initially existed upon construction.
Banks that fund the construction of these off the plan apartments should be able to provide pre-approval to buyers that will last right up until settlement.
By doing so, the risk is reduced for the buyer as they won’t have finance risk to worry about and it also reduces the problems for developers as they don’t have to worry about settlement risk. It’s therefore a win-win situation for the banks.
Read the full article here: Lender design stance just hurts buyers: iBuyNew’s Mark Mendel
To learn more about buying off the plan, get in touch with the iBuyNew team today by calling 1300 123 463