Take all nec­es­sary steps to pro­tect your in­vest­ment when buy­ing off-plan

Weekend Argus (Saturday Edition) - - PROPERTY -

WHILE the prospect of mov­ing into a brand-new home is ap­peal­ing, there are many po­ten­tial pit­falls when it comes to pay­ing for a home that doesn’t yet ex­ist, says Shaun Rade­meyer, chief ex­ec­u­tive of Bet­terBond. Here are some hints as to how to avoid them:

Check cre­den­tials: Buy­ers of off-plan homes should not pay a de­posit or sign an agree­ment to pur­chase un­til they have thor­oughly checked the cre­den­tials of the de­vel­oper and/or the builder.

“You should also be ab­so­lutely cer­tain that any de­posit you do pay will be held in trust by an at­tor­ney or a reg­is­tered es­tate agent – and be repaid with in­ter­est if the de­vel­op­ment does not go ahead within a spec­i­fied time.”

Look at the de­vel­op­ers’ part­ners: When a new de­velop- ment is launched, prospec­tive buy­ers should en­sure the de­vel­op­ers are part­nered with a bank or a rep­utable bond orig­i­na­tor to help get the home loans they will need.

“This is a good sign that the de­vel­op­ment is le­git­i­mate and that the de­vel­oper has al­ready se­cured the nec­es­sary fi­nance to fin­ish it. In ad­di­tion, buy­ers will im­me­di­ately be able to get a pro­fes­sional as­sess- ment of what they can af­ford and whether they are likely to ob­tain the home loan they want, or whether they first need to work on their credit record or pay off some debt.”

Bud­get for monthly levies: Buy­ers plan­ning to buy into sec­tional ti­tle or es­tate de­vel­op­ments – where most off­plan pur­chases oc­cur – must re­mem­ber to bud­get for the monthly levies as well as the home loans and other reg­u­lar ex­penses.

“They should also make sure they know ex­actly what the levy cov­ers – and by how much it is likely to in­crease once the de­vel­op­ment is fin­ished. There could be quite a steep jump once the last unit is sold and the de­vel­oper is no longer in­volved and no longer sub­si­dis­ing cer­tain costs,” Rade­meyer says.

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