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The advantages of a longer property completion time

Published on 20 Jul 2017 by Alex Goldhagen

The advantages of a longer property completion time

If you are considering buying property off the plan then you might want to purchase a property that has a longer completion time. Depending on the size of the development and whether development approval has been given, settlement can be two or more years away, giving you, the buyer, adequate time to save up a larger deposit, whilst potentially see your property appreciate in value, before you’ve even started to pay a mortgage.

If you have the time to spare and are not in any hurry to see your property complete, then you might want to consider buying a property with a longer completion time of two years or more to take full advantage of the benefits.


Advantages of a longer completion time


1. Only require a 10 per cent deposit today

Firstly, if you purchase property off the plan, you only require a 10 per cent deposit and then don’t have to worry about paying anything else including a mortgage until settlement. This makes a property purchase far more attainable, especially for first home buyers.

2. Ability to save up a larger deposit

With a longer settlement time, comes the ability to save up a larger deposit to be used towards your property, or as a buffer for a rainy day. Buyers who currently rent, might find it difficult to save up money quickly, so a longer settlement time allows you more time to save and get your finances in order, as well as pay off any bad debt such as credit cards. Getting your finances in order will help when you do ask a lender for a loan, showing that you are in a good financial position to apply and be approved for a loan.

3. More time for your property to appreciate in value

With completion and settlement of your property due in two years’ time, this gives your property more time to appreciate in value, without you having to pay anything else. This is especially true if you have timed the market correctly and bought in a rising market before the boom occurs.

4. Build up a property portfolio faster

Another advantage of having a longer property completion time is that by the time your property settles, your property may have made a good amount of equity. Rather than having to save up another deposit for your next property, you can tap into your equity, allowing you to purchase investment property number two sooner than you might think.

5. More time to get over major events

A longer settlement time also provides you with the time to get over major events such as saving for a wedding, having a baby or relocating overseas.

Bear in mind, the earlier you buy within an off the plan development, the lower the entry prices and the longer the settlement period. Expect property prices to rise, especially when the developer reaches their pre-sales limit and can begin construction. A property bought before construction will usually be cheaper than one under construction, or in the final stages of construction. Buying earlier also means that you are more likely to choose your preferred colour schemes to suit your preferences.


Longer completion time risks to be weary of

Although, there are many advantages of a longer completion time, buyers also need to be weary and do their thorough research first to keep risks to a minimum. Some key points to consider include:

1. Make sure there is development approval

One of the first things you should check when looking at off the plan properties, is whether development approval has been granted. A development cannot start construction without development approval from the council, so this means there could be further delays or worse-case scenario, the development will not go ahead. It’s therefore worthwhile using a reputable developer and buying within a development that already has this approval to avoid wasting valuable time in the market.

2. Changing market conditions

With settlement two years or more away, this means that lending restrictions or policies could change which you need to prepare yourself for. Perhaps banks will toughen up on their lending, interest rates might rise or you require a larger deposit. To minimise this risk, it’s best to always buy comfortably within your budget to ensure you have some spare capacity. A longer settlement also allows you to continue saving up as much as possible, giving you an emergency buffer if required.

Find out more

If a longer settlement and property completion time appeals to you, then it’s recommended that you speak to one of our Property Consultants at iBuyNew to find out more about buying off the plan and what properties are currently available to buy with settlement two years or more away.

Although highly sought after by investors, a property with a longer completion time also appeals to first home buyers, downsizers and owner occupiers.

Curious to learn more? Get in touch with the iBuyNew team today by calling us on 1300 123 463.

Alex Goldhagen

Alex has previously worked as a Mortgage Broker and Financial Planner and enjoys helping his clients with their purchase of off the plan property in Sydney, Melbourne and Brisbane. For more information, contact Alex by email, alex@ibuynew.com.au, or call 1300 123 463.

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