Britain’s property market continues to blossom, with 154,220 new build developments completed between January and September 2017 – a 9% increase from the same period in 2016. Many of these boast great locations, luxury amenities, and even better returns for investors looking to secure attractive rental yields.
An off-plan purchase gives you access to these sought-after developments before they reach completion. In most cases the property will complement contemporary styles and décor meaning it’s not necessary for you to spend time and money on decorating, refurbishment and repairs. You can also benefit from structural and other guarantees from the developer and/or builder.
Thinking of buying a new property in Britain in 2018? Whether you’re purchasing a BTL property to enrich your portfolio, or looking for a new home in the UK, our expat mortgage experts have compiled an essential introduction to off-plan purchasing.
What is an off-plan purchase?
Off-plan property purchases occur before or during development of a residential scheme. This is becoming increasingly popular as interest grows in UK property, giving buyers access to the best units and often discounts in return for reserving the unit early.
It can also have implications for finance; investors stand the possibility of securing better finance terms with an off-plan purchase. However, it’s important to note that it affects the process for securing a mortgage too, especially if you’re an expat or overseas buyer looking to get a foothold in the UK property market.
Buying off-plan: the process
When buying off-plan, you’ll need to pay a reservation fee and a percentage on exchange (this varies by developer) for your property up to 18 months before the development is completed. This can prove problematic for mortgage applications, since traditionally you secure finance with near-immediate effect.
A mortgage Decision in Principle is usually valid for three months, as a result, when buying off-plan, the process involves committing to the purchase before securing finance.
However, this shouldn’t deter you. Providing you follow reasonable steps to maximise the chances of a successful application, there’s no reason why an off-plan purchase wouldn’t be within your reach.
Tips for buying off-plan
Take these tips for buying off-plan on board to ensure you have the best possible chance of securing finance when it comes to applying for an expat mortgage:
– Have confidence that you can afford the property you’re buying – if possible, it’s best to establish your finance options first by exploring lenders who offer the best rates and LTV ratios for your circumstances, and let them guide your choice of property.
– Identify the type of mortgage you need: are you a standard or first-time buyer, or are you purchasing through a limited company? Is the property BTL, or for yourself?
– Assess the Loan To Value (LTV) ratio of the property you have in mind. The lower the LTV, the bigger the loan size you’ll be able to secure.
– Consider your situation as a non-resident borrower; with time to prepare, you can take steps to avoid common pitfalls when applying for a mortgage.
These are just a few tips to help you navigate the complex buying off plan process. Meanwhile, to give you confidence in your off-plan purchase, it pays to consult an expat mortgage specialist as soon as possible.
Liquid Expat Mortgages can give you access to exclusive developments across the UK, hundreds of lenders who accept new-build flats, apartments and HMOs. For more information on lending options, call 0161 871 1216 or email firstname.lastname@example.org today.