When applying for a home loan for an off-the-plan apartment, there are a few things you need to consider before you approach the topic of buying.
As your apartment isn’t built yet the banks approach these homes with different lending considerations.
1) Do your research
As most apartments can take months, even years, to build, it leaves you with a lot of time. Use all the time available to you to figure out who will provide you with the best loan. Surveryors for the bank need to be rather accurate in assuming how much your property will be worth when it is built, rather than what it is paid for today - this won’t effect how much your have to borrow, but these variables will change how the bank views your application.
There are hundreds of loans available to you, and finding the right one for you can be overwhelming. And whilst you may automatically be inclined to approach the big banks, smaller banks and lenders can often provide extremely competitive interest rates and loan flexibility.
2) Save
Most developers require a 10% deposit to secure a property, and this is usually in the form of a bank guarantee or by a bank deposit. In the mean time, it is imperative to continue saving right up until you apply for a home loan.
If you are applying for a loan that is more than 80% of the properties value, you will, in most cases, have to pay a Lenders’ Mortgage Insurance fee, which will vary on the amount borrowed.
If you have secured an apartment valued at $600,000, and want to borrow $500,000, a fee of around $4,000 will is either paid up-front or is added into your loan.
3) Consider a mortgage broker
Mortgage brokers possess a large casting net when it comes to home loans. From loans with all major banks such as Commonwealth Bank, NAB, ANZ and Westpac, as well as somewhat smaller lenders such as ME Bank, Bendigo and Adelaide Bank and La Trobe Financial, mortgage brokers have access to the necessary tools to give you the best chance of getting the loan you want.
When you are meeting a mortgage broker, you are sitting opposite dozens of banks and over 100 different mortgage loans, rather than just the options of a bank manager’s bank.
4) Lock in a solicitor
Having legal experience on your side will ultimately keep your mind at rest as you approach all facets of your off-the-plan purchase. Having a solicitor from the start will give you someone who is familiar with the purchase from the beginning, and may come in handy when you’re approaching banks or lenders or when it comes time to sign off on any of the contracts presented before you.