Loan Tip for Buying off the Plan

Discussion in 'Loans & Mortgage Brokers' started by Terry_w, 10th May, 2021.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    When buying off the plan there is no set settlement date as it is unknown when the project will be completed.

    The contracts will generally make settlement xx days after the plan of subdivision is registered. Usually, the xx is just 14 days.

    This way too short a period and property solicitors and conveyancers often fail to realise this when advising clients. Ideally you should agree to 28 days as the loan will still need a lot of processing to get the full approval and



    Example

    Marge buys a property off the plan and doesn’t seek proper advice.

    She is told that the settlement will be December approx.

    The property is in a different area to her and she doesn’t get to see how much progress is being made, but is happy as the prices have increased.

    Suddenly in early Oct she is told the titles have been registered and she must settle within 14 days. She was just about to go on a little holiday and hasn’t even applied for a preapproval.

    Even with the fastest lender out there she will struggle to get approved within 14 days let alone settle within 14 days.
     
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Ditto unregistered land. The developer may provide very short notice which sounded reasonable a year + ago but is totally unreasonable at present. Most land developers are fairly tolerant to loan approval extensions but may lose patience. My son recently encountered this and his lender nearly triggered default interest clauses but it all settled at the final hour.
     
  3. MC1

    MC1 Well-Known Member

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    I've got a tip - don't buy off the plan
     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Can work out well for house and land packages, but units are very risky
     
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  5. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Yep agreed with Terry, 14 days is not enough these days.

    If it can be negotiated to say 28 days for settlement, then why arent solicitors doing it now ? Or are they ?