That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
New Build Nightmares: What Property Developers Don't Tell You
"Should you buy a house that doesn't exist yet?" That's the question at the heart of our deep dive into the glittery but sometimes treacherous world of off-plan property purchases.
Forget what you've seen in the glossy brochures—buying off the plans isn't just about picking finishes and waiting for the keys. It's a financial commitment with unique risks that can catch even savvy buyers off-guard. We explore the hidden traps lurking in developer contracts, like the notorious "sunset clause" that lets developers cancel your contract if property values rise, potentially leaving you in the cold after months of waiting.
Through the real-world story of Dan and Priya, we reveal how a seemingly straightforward townhouse purchase in Lower Hutt became a nail-biting ordeal when their completed property was valued at $45,000 less than the contract price. Their scramble to cover the shortfall or lose both their home and deposit highlights why off-plan purchases require vigilance and solid backup plans.
But it's not all doom and gloom. We also unpack the genuine benefits that make new builds attractive—lower deposit requirements, potential capital gain during construction, and the joy of a brand-new, low-maintenance home built to modern standards. The key is approaching these opportunities with eyes wide open.
Armed with practical tips on researching developers, understanding finance timeframes, and protecting yourself legally, you'll finish this episode knowing exactly how to tell whether an off-plan purchase is your dream opportunity or a potential disaster waiting to happen. Your dream home shouldn't come with nightmare clauses—let's make sure it doesn't.
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Buying of the plants dream or disaster what you need to know before saying yes to a shiny new build. Kia ora, friends, and welcome back to that Home Loan Hub. I'm Zibunisa Alimova, mortgage advisor, mom of four and, today, your personal guide through the glittery but sometimes risky world of buying of the plants. If you ever thought, oh, a brand new home, I could just move in and not lift a finger, you're not alone. New builds can look like a dream, especially if you don't need a paintbrush or a rental budget. But here is the real question Is buying off the plans a dream or could it turn into a disaster? Let's break down the pros, the pitfalls and what you really need to check before you sign anything. Number one what does buying off the plans actually mean? Buying off the plans means you're purchasing a property that hasn't been built yet. You're usually committing based on floor plans, renderings and specs, and sometimes just a patch of dirt in a brochure Sounds futuristic, right, and there are the perks, but also some serious things to watch out for. Let's talk about the pros. Let's not ignore the upside Lower deposit requirements for the builds, especially with Kayango or a first home loan schemes. Potential capital gain If prices rise during the build, you could move in with instant equity. Everything is brand new, meaning less maintenance, more modern layouts and up-to-code building standards. Meaning a warmer home too. Time to save more, because settlement usually happens months after signing, in some cases even more than 12 months Sounds amazing right Now let's balance that with the reality, the pitfalls you can't afford to ignore.
Speaker 1:Sunset close. There are closes that allow the developer to cancel the contract if the build isn't completed by a certain date. Guess what If values rise? They might cancel and resell for more Delays. Builds often take longer than planned. That affects loan approvals and your moving plans. Valuation risks, the final property might be worth less than the contract price at completion and the bank could reduce what they're willing to lend. This is a huge one, so please pay close attention to this one. Now, spec changes Some developers downgrade materials or finishes without notice. The house you imagined might not be the one you get. Let's look at the case study the unexpected delay and down valuation.
Speaker 1:Let me tell you about a client couple, dan and Priya. They signed to buy a townhouse off the plants in Lower Hart. 10% deposit settlement in 12 months. All looked good, but the build was delayed twice and by the time it was finished, the market had softened a little. Their contract price was $790,000, but the final bank valuation came back at $745,000. That meant the bank wouldn't lend the full amount and they had to scramble to cover the shortfall or risk losing the property and their deposit altogether. Luckily we found them a solution and got them across the line, but that was a stressful ride.
Speaker 1:So lesson in this buying it off the plans isn't set a forget move. You need ongoing support and backup options, and my number one tip is usually save, save, save during the build. Let's look at some more tips that I have for you. Here's what I tell every client looking at a new build Get proper legal advice, especially around the sunset clause and build delays. Just like the developer can pull the sunset clause on you, you can pull the sunset clause on the developer as well. So if the build is not complete on time, you can actually withdraw from the contract as well.
Speaker 1:Ask questions about the builder. Look at the reviews, the history and the build time record. Confirm your finance timeframe. Some banks only hold pre-approvals for 90 days. You may need multiple re-approvals. There are certain banks that can approve you up to 12 months, but again, we do have to do certain things to keep that approval in place. So if anything changes in your life financially, that approval may need to be re-approved again. Get regular updates and don't assume no news is good news. Stay on top of the news with your developer. Check in on the property. If you can physically yourself to drive by Now, have a plan B just in case the valuation or lending doesn't go to plan.
Speaker 1:And don't worry, this is where I come in. I help manage that process so you're not caught off guard. Final thoughts Buying off the plans can be a brilliant move, especially for first-time buyers or people wanting something modern and hassle-free. But it's not just a matter of signing the contract and kicking back. You need someone in your corner who knows how to ask the right questions, structure the finance properly and fight for you if things go sideways. So so dream big. Just make sure you've got a solid plan behind that dream. That's it for the episode of that Home Loan Hub. If you're considering a new build or have questions about a contract you're looking at, flick me a message. Let's make sure your dream home doesn't come with a nightmare close. Follow the podcast. Send this episode to someone eyeing up a shiny townhouse brochure and I'll catch you next week for more smart mortgage talk without the stress.
