Buying Off-Plan

At a time when property prices are sky rocketing it helps to explore all the available options when looking to buy a new home.

There are a number of ways you could save money and reduce you home loan amount. One increasingly popular option is to buy-off-plan.

New housing developments are always being built and if you’re familiar with the area it could be wise to approach the developer and put in an offer to purchase before the development has been completed.

Off-plan purchases are usually much cheaper, and by buying off plan you will also avoid the added transfer costs.

When buying off plan you will be presented with building plans, it is then up to you to decide whether the home will suit your needs in terms of size and design.

The major difference between buying off-plan and buying existing houses are the factors which determine the prices. Prices of existing homes are primarily determined by supply and demand whereas the prices of new developments are determined by the building, labour and material costs.

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Advantages of Buying Off-Plan

Smaller Deposits – The advantages of buying a new home off-plan is that the initial deposit required is considerably lower.

Delayed Occupation – Because you will need to wait until the development has been completed you will be able to use this extra time to save up for the purchase. Which means you’ll be paying off a smaller Home Loan.

No Transfer Costs – The developer pays VAT on the transaction instead of you paying transfer duty. All costs should be included in the quote price, making it even more palatable to you as a private buyer.

Home Loans – because you’re buying from a developer and therefore are not liable for any transfer of ownership costs, you can apply for a full 100% home loan and not have to worry about finding extra funds to cover these costs.
Apply for a Home Loan Online at www.ibo.com – one of South Africa’s leading online mortgage originators.

Although there are many advantages to buying a new home off-plan you need to realize that there are some risks involved too.
Before you decide to buy, check whether the developer is a member of the Building Industries Federation and ask for a list of contactable references.

For more information on buying a home off-plan or how to go about applying for finance to a new development complete this online form and a consultant will contact you immediately.

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2 Comments on “Buying Off-Plan”

  1. I would like to find more about the cost involve when buying a new property, e.g lawyer fees, registration fees, evaluation fees, initiation fees, ect.

    Reply:

    Hi Mannda,

    The costs involved in purchasing a new property would depend on the Bond/Homeloan Amount but here is a break down of the costs based on a R300 000 Bond:

    Transfer Costs
    Conveyancer fees for the transfer: R4400
    Posts and Petties: R400
    Deeds Office fees: R260
    VAT: R672
    Transfer Duty: R0

    Bond Costs
    Conveyancer fees for the transfer: R2700
    Posts and Petties: R300
    Deeds Office fees: R260
    VAT: R420

    You will not incur any extra costs when applying for a home loan through Property Loans SA because our service is 100% free to our clients. We are paid by the banks and this cost is never passed on to the client.

  2. I am buying off-plan and the building contractors do not want to apply for a loan from my preferred bank. I have already signed the building contractor forms what do I do now?

    Reply:

    With regards to your question about applying for a homeloan from your preferred bank…

    Unless stated in the contract you may choose to approach any banking institution you wish.
    There are usually no clauses that bind the customer to apply through the contractor’s preferred bank; however you need to read the contract carefully to see if there were any special clauses added in this regard.

    Instead of going to each bank separately, you could approach a mortgage originator such as Mortgage Innovations. By using a mortgage originator your application will flow much faster and it will also be submitted to a number of banks.

    Though, there is one other option:
    After a period of 6 months you can switch your home loan to your preferred bank. The advantage of this is that your preferred bank may even offer you a better interest rate for switching.

    Best Wishes
    The Propertyloans team
    http://www.propertyloans.co.za

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