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  • Buying new off the plan or building

    Looking to buy a brand new home? These are the pros and cons.




    Buying new is buying a completely new property and being the first person to live there.

    Depending on where you live may be eligible as a first home buyer or first home owners grant as well as stamp duty concessions. 

    So what are the risks of buying a new home is that you may not get exactly what you expected at the end.  The benefits are that you're the first person to live in it, and that has great appeal to a lot of people.  As an investor you can earn a higher rental return because the property is new as well.

    Buying off-the-plan is buying a new property that hasn't been built yet.  Buying off-the-plan has a major financial advantage in that you're only required to pay the deposit, so you don't really have a huge cash outlay until the property is complete and has been built and is ready to settle.

    One of the key risks that you should consider is that there may be delays in the completion date.  Additionally you need to be prepared with the property may settle early and they're ready to go before you've got your finance in place.  A second consideration is that the property may be worth less than what you agreed to pay for it, so you're going to need to fund that difference yourself.

    Building your own home means that you're engaging a builder yourself and building a home from scratch.

    One of the disadvantages of building your own home is that it is complex.  There are going to be potential delays and you may have to continue to rent where you are whilst you continue to pay the interest on your loan as well.  One of the financial advantages of building your own home is that you are only required to purchase the land in the first instance.  You then fund the project in stages.  So you're only paying interest on the money that you're borrowing as you complete the project.

    Another advantage financially for you is that you only pay stamp duty on the land purchase not on the completed value of your home.

    My number one piece of advice is to thoroughly do your research and to engage with your home loan specialist because they've been through this, they know what to expect and can help guide you through what is a very complex process and help you decide exactly what is right for you.

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  • Disclaimer:

    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional adviser, accountant or taxation expert for advice specific to your personal circumstances.

    The views and opinions expressed in this article are those of the author alone and do not necessarily represent the views or opinions of RAMS Financial Group Pty Ltd ABN 30 105 207 538 (RAMS),  Westpac Banking Corporation ABN 33 007 457 141 (Westpac) or their related bodies corporate. This article is strictly for information purposes only and neither RAMS, Westpac nor any of their related bodies corporate make any representation as to the accuracy or completeness of the information in this article or endorse the views expressed in it.