Loan changes for off-the-plan investors


Off-the-plan investors are facing financial stress finalising the purchase of their properties following the introduction of new lending rules which now require bigger deposits. Recent findings have found one in three off-the-plan investors are in financial upheaval.

Off-the-plan property attracts many investors. The appeal of purchasing this kind of property comes with locking in today’s prices for a building to be completed in typically 18 months and the advantage of additional time to save. Investors can also access tax breaks to help lessen the burden.

However, these benefits may be offset with banks demanding higher deposits from buyers. Some off-the-plan investors are struggling to meet their financial obligations after making the original deposit to source another 10 or 20 per cent of the purchase price as deposit at settlement.

Investors purchasing off-the-plan through their SMSF have stricter rules enforced, with up to a 30 per cent deposit required in some cases. SMSF investors are not eligible for mortgage insurance due to the limited recourse, which means there are limited claims on a loan if a default occurs.

Many struggling property investors and buyers are now turning to mortgage brokers to find out how to resolve their property problems. Those with sufficient funds should show their lender that they have the funds to cover any shortfalls caused by the loan-to-valuation policy change, and allow the original lender to lend them the rest.


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