When considering the purchase of a new build property, a key factor to evaluate is the type of funding that best aligns with your needs. New builds, or 'off the plan' properties, are primarily offered in two funding packages: the 'turnkey' package and the 'land and build' or 'house and land' package.
This week will cover off turnkey packages, stay tuned for next week, where we cover off land and build packages!
Turnkey packages present a streamlined approach tailored to simplify your entry into the property market.
What Exactly is a Turnkey Property?
Buying a new property off the plans can be easy, especially with the 'turnkey' option, which offers a hassle-free entry into property ownership, ready for immediate occupancy or rental upon settlement. A 10% deposit is paid when going "buyer unconditional," which remains untouched until settlement and contributes to the final balance.
One major benefit of turnkey properties is that after the initial deposit, no further payments are required until the property is completed, which can take 3 to 12 months. While this option may be slightly pricier than traditional 'land and build' packages, many find the convenience and reduced stress of managing fewer payments worthwhile.
Financing a Turnkey Property
Because a turnkey property may have a settlement date 6-12 months from going purchaser unconditional, financing the property can be done in two ways.
If you are confident in your financial situation and do not plan on making any major purchases before settlement, you can simply request a pre-approval from your financial adviser to confirm your affordability at the settlement date. While this approach may be considered riskier than securing conditional finance from the banks, it involves less administrative work. Then, ninety days prior to settlement, your financial adviser can then initiate the conditional-approval process to ensure you are fully prepared for settlement.
Conversely, for peace of mind, you can organise conditional approval during your conditional period, that can last from 6 to 12 months. This means ordering a registered valuation from via your adviser and tick off the required conditions from the bank, leaving only things like clear Title and Code Compliance Certificate (CCC) due before settlement. Learn more about preapproval vs conditional approval here.
In conclusion, the turnkey property purchase method offers a streamlined and user-friendly approach for potential homeowners. It simplifies the process and minimizes the complexities typically associated with real estate transactions. By understanding the steps involved and preparing adequately, you can confidently embark on your property journey, knowing that you’re making a wise investment in your future. Whether you're a first-time buyer or looking to add another property to your portfolio, the turnkey option is definitely worth considering.
If you're looking to buy a property, we recommend getting in touch with your mortgage adviser to sort out your lending. This way, you can act fast when the right opportunity comes up. You can also reach out to our team at Equiti, and we’ll help you find properties that fit your needs. And hey, if you're a financial adviser, don’t forget to share this article with your clients to help them make smart choices about their property investments!