Home Decor

10 steps to buying a property off-plan

Buying off-plan is something many people shy away from because they feel it’s a complicated process that is best left for people with a lot of property experience. The truth is it’s really simple and can be a very intelligent investment. Here are 10 steps to purchasing an apartment off-plan.

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You won’t be able to get a mortgage offer until about six months before completion, however it depends on which lender you use. A financial advisor will give a good steer as to what can be borrowed and when you should begin the formal application process.

Once you have agreed a price, you will need to pay your reservation deposit which takes the apartment off the market.

You will also need to fill out a reservation form and appoint a solicitor. If you do not have a solicitor, there is often a suggested solicitor who is familiar with the specific process for that development.

When your apartment is ready, you will be sent a completion notice telling you how long you have to complete on your purchase – usually about two weeks. You just need to let your mortgage company know and your solicitor will do the rest. You will be able to collect the keys on the day of completion. After you have exchanged, check with your financial advisor when you should start your formal mortgage application process. It depends on the lender but generally it is around six months prior to completion.

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A 'living rent' could solve the housing crisis

It’s a sensible question – while in theory, lenders have to take steps to ensure you can afford to keep up the monthly repayments (as much for their own sake as yours), buyers can still end up saddled with a mortgage they can’t afford.

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There are a number of mortgage calculators online, such as the one provided by SPF, which give a good general idea of how much a mortgage will cost per month, taking into account the price of the property, the deposit available, the length of the mortgage and the rate of interest.

Mortgage calculators don’t usually factor in the other costs associated with a mortgage, such as arrangement fees.

While these are mostly one-off costs, they still need to be considered when deciding whether you can afford a mortgage. They will all be tabled in a mortgage illustration document which your lender should provide.

The terms of the mortgage may also affect your decision: are there missed payment fees or early repayment charges? The latter could be significant if, for example, you’re planning to use part of your pension to pay off your mortgage early. And if you’re getting one of the less common types of mortgage, such as an offset, you will need to consider whether you can afford to devote enough of your savings to make it worthwhile.