When the time comes to purchase a property, most people think of the traditional ‘on the market’ purchase that is facilitated by an estate agency. However, not all UK property purchases happen in this way – and another interesting way you can buy a house is by purchasing an off-plan property.
But what is an off-plan property? How do you buy one – and what are the pros and cons of doing so? In the blog below, we have given you clear answers to all of these questions.
What is an Off-Plan Property?
When you purchase an ‘off-plan’ property, it means that you have bought it before it has been built. This method of buying is not uncommon for property developers who want to ‘get in early’ and own a property before it is built. Buying an off-plan property can also give you a tad more input on its design, which can allow for some customisation.
How to buy an off-plan property
If you are interested in buying an off-plan property, they are several steps which you should follow.
The first step is to find the off-plan property that you are interested in, and then reserve it. As part of this, you will often need to speak to a mortgage broker to make sure you are able to afford it – but once you are certain you can, you can pay a reservation fee for the off-plan property, which is typically around £1,000.
Once this has been done, you should hire a solicitor/conveyancer to assist you in all forthcoming legal processes, and you should also arrange your finances, such as applying for a new-build mortgage.
Thirdly, you will have to exchange contracts and pay a deposit for the off-plan property. This is the moment when the house will start to be built, and you have to wait until that process is completed.
Finally, the developer will give you an indication of when the development will be completed by. Once this date comes around, and the house is fully built, you can move in and enjoy your new house.
Pros of buying an off-plan property
Buying an off-plan property comes with several advantages which are attractive to potential homeowners.
First of all, when you purchase an off-plan property, it guarantees that the house will be a new build when you move in. New build properties have experienced less wear and tear, and will therefore be more modern in design, with usually fewer faults.
Some off-plan properties also come with a new build warranty, which gives you significant protection.
You may also find that it is possible to personalise your off-plan home by having a say on the internal layout, fixtures and fittings as well as where it sits within the development. This can make your living experience more enjoyable when the time comes to move in.
Cons of buying an off-plan property
While there many advantages to purchasing an off-plan property, there are some drawbacks for you to consider, too.
Some homeowners prefer to clearly visualise what their property looks like, when they purchase it. When the house is in front of you (already built) you have total clarity about what you are getting for your money. On the other hand, when you purchase an off-plan property, you can never be completely sure about exactly how it will look, and this introduces an element of risk to the purchase.
Secondly, the vast majority of mortgage offers from lenders last for up to six months – which means that if the construction process is delayed, you may have to re-apply for your mortgage. This can be an inconvenient and time-consuming process, which may be another unwanted obstacle of buying an off-plan property.
A lot of mortgage lenders don’t offer mortgages on off-plan properties. This can limit the number of offers you have to consider, as well as how good an offer you are able to get.
Finally, the value of your property can vary from the moment you secured your mortgage, to it finally being built. If it changes significantly, it could affect your mortgage offer.
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