Potential problems between buying and building
When you buy a freestanding home off-plan, you take transfer of the land and then pass a lien over to the builder so that building can start. You then pay interim interest on the first payment drawn on the bank while waiting for your home to be built. If there’s any delay in building, there’s a risk that you’ll pay more interest than you budgeted for.
Interim interest isn’t paid on units in sectional title schemes, which makes sectional title developments less risky than plot and plan. Another problem with buying into a new development at a very early stage is that you might be one of the first to build and occupy a home, while other buyers take more time.
While other owners are building, you will have to put up with contractors on your doorstep, and possible disruptions in the delivery of water or electricity.
If you are one of the first to build, you might find that not all the infrastructure has been installed or that security is lacking.
Mortgage finance for buying property off plan
If you are buying a sectional title unit, you pay a deposit to secure the unit, and no further payment is made until the development is complete and your unit is registered in your name.
When you buy a freehold home off-plan, the stand must be paid for and transferred into your name before building can start. You will need another loan for the home that is yet to be built. You begin your repayments on the stand as soon as the land is registered in your name, but your bond repayments on the building only start once that is registered in your name.
The golden rule still applies
When buying a new home - already built or off plan – it’s essential first to research the area the development is in. Lifestyle choices are important when buying a home, such as open space, proximity to shops and schools, or shorter travelling times to and from work. Always keep in mind what you and your family need when it comes to privacy, garden or security and compare all the options signing an offer to purchase.
|www.privateproperty.co.za monthly, we're SA's favourite property portal. List your property with Private Property South Africa (Pty) Ltd, as a private seller or an agent, and we'll bring buyers to your door.|