Lenders should be required to provide off-the-plan apartment purchasers with a funding pre-approval that will last them until settlement, a leading online property agency has argued.
iBuyNew CEO Mark Mendel said if banks are prepared to fund a development for construction then they should take the same stance on providing finance when it comes to the buyers of those apartments.
“The banks should be offering to fund the buyers of those apartments under the same policy that exists when the construction started,” Mendel said.
“Buyers of off-the-plan apartments should be able to go to the bank that funds the construction and take out a pre-approval that will last them until settlement.
“This reduces a part of the risk for the buyer as they don’t have finance risk. It also reduces problems for the developer as they don’t have settlement risk and overall it’s a win/win situation for the bank.”
Mendel, whose company focuses on off the plan apartment and townhouse sale, said settlement risk for off-the-plan properties is something buyers, developers and lenders need to guard against.
He said there was an onus on banks in the current highly competitive lending landscape to better protect their home loan customers.
“Consumers typically will not have the knowledge or expertise to predict what will occur in the economy going forward,” he said.
“Banks have research teams who will have a better idea of what will play out economically over the next 18 months.
“Some lenders are in a position to provide mortgage pre-approvals of up to 12 months, which would better protect customers purchasing off the plan.”
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker
Top Suburbs :
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out