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| 24 Jul 2012, 11:31 PM Agree 0

looking at buying 1 bedroom unit with study 55 sq meter 3 blocks from beach of the plan ready 12 months 285.000 with furniture package wondering if anybody has an opion on bowen or if you think this is a bit expensive
  • Brock Chewings | 25 Jul 2012, 04:29 AM Agree 0
    Generally your money will tell if it is cheap or expensive, if you really want it and have the money to buy without compromising your status quo it will be a great acquisition, but if you still have to apply for a loan to acquire it you should consider your annual income, if the mortgage will fall to the 28% of your annual income it is AFFORDABLE, if it is lower than 20% it is CHEAP but if it is higher than 30% that will be EXPENSIVE for you.
  • Eos Property | 26 Jul 2012, 12:45 AM Agree 0
    Hi Mat,

    Don't know enough about Bowen so will focus on the OTP aspects of your potential investment.

    OTP at the moment is a risky form of investment for a number of reasons primarily related to finance. The contract will require that you go unconditional within a defined period of time (generally 28 days or so - depending upon the contract). However your loan will not be unconditional at this time as the bank has not and cannot do a final valuation as this will only occur when the property is completed. Sure you'll probably get conditional finance but this is very different to unconditional finance.

    You are now caught - you are required to go unconditional but the bank won't give unconditional finance so what do you do? Most investors hang in and remain with the deal without knowing how the valuation will stack up as this is done at the very end of the construction phase.

    Some banks also have a ceiling on the number of units they will finance in any given development - sometimes this is not apparent until all units are under contract and finance applications in.

    To me standard OTP plan investments are a little risky especially given the dynamic nature of the lending market at the moment.

    If going OTP make sure your solicitor is familiar with the nature of the OTP contracts and can write conditions to provide you with maximum protection.
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