The 0% deposit will apply for the buyers paying in installments when a property is still under construction. The concept will basically borrow more from the hire purchase module of payment where on or during construction of the unit, an individual will partially own the unit whilst honoring his monthly obligation. The predetermined percentage of initial deposit is divided and spread out prior or during the construction period as monthly installments.
Although at this stage of purchase, the banks are not directly involved, various reputable partnering banks and other Financial Institutions will be availed and engaged in order to record payment history throughout the installments payment period. These records will play a vital role in the appraisal process to acquire a mortgage at the end of construction.
There are two stages in the unit acquisition,
- During construction
- On completion
Stage 1 – During Construction
To sign an unconditional agreement to honor monthly payments and continue with the same model.
Stage 2 – On completion – there are two ways to clear the outstanding.
- To obtain a mortgage from our partner banks to clear the outstanding balance for the unit.
- To clear the outstanding in cash.
Advantages of 0% deposit off plan unit purchase.
For a purchaser, the potential upside of buying property off plan is considerable considering the merits below.
- Lock in a discounted price – By purchasing at the earliest opportunity, the time difference between initially securing the contract with a fixed price against the value at completion can be significant and this upside is your instant profits regardless of whether you are buying to rent out or reside in. s
- Securing a high value asset with zero capital outlay hence the zero percent deposit– While a deposit is made to secure the property (usually 20%), the entire payment doesn’t need to be paid until the property has been built. This provides you with time to organize your finances.
- By securing your unit in the earliest phase, you are able to secure the style and type of property that matches your investment criteria and, in some instances, can influence some specification during construction. You also have a wider pool to choose from.
- For a mortgage buyer you are able to reduce on the mortgage exposure and the interest thereof as you would have paid a substantial amount prior completion.
- Increase in property value –If the market experiences growth, the property you purchase off the plan today increase in value when you settle two years later.