<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1653223531561810&ev=PageView&noscript=1" />
MMO Team Photo

Off-plan property valuations

Off-plan property valuationsOff-plan property valuation guidelines changed towards the end of 2016, resulting in some changes to the way off-plan purchases are approved by lenders.  If you’re thinking about an off-plan purchase (or have already committed to one), here’s what you need to know.

 

How were ‘off-plan’ property valuations conducted in the past?

Valuers used to conduct an “As If Complete” valuation for off-plan properties by providing an estimated value of the property as if it was completed.  This “As If Complete” valuation was based on the Contract, floor plans, list of inclusions and comparable sales data.  A lender would Formally Approve a loan based on this “As If Complete” valuation amount, as well as arrange for a final inspection to be conducted prior to Settlement.  The final inspection was a way of checking that the property was actually finished – and built in accordance with the floor plans and inclusions – before the lender agreed to release the funds and settle the loan.

 

What has changed?

As a result of changes to property valuation guidelines, a valuer now needs to physically  inspect a property to assess its value.

A property doesn’t have to be absolutely complete, but it needs to be accessible to a valuer for the physical inspection. If the property is not yet fully complete (or common areas noted as conditions in the contract aren’t finished or the Certificate of Title hasn’t been issued), an “As If Complete” valuation will be provided.  However, this “As If Complete” valuation is based upon a valuer’s inspection of a ‘mostly complete’ property, not a property that only exists on paper – as was often the case previously.

 

What does this mean for an ‘off-plan purchase’ loan application?

A lender will only issue Formal Approval when a valuation is deemed satisfactory. Since a valuation can now only be performed on a property that is complete (or very close to complete), a lender can’t issue a Formal Approval for your loan until the property is very close to settling.

 

How does this affect me as someone who has committed to an off-plan purchase?

We can still lodge your pre-approval application just as early as before – and get confirmation from the lender that they agree to the purchase in principle. However, the property will now have to be almost complete before we can upgrade it to a Formal Approval.

The timeframe between Formal Approval and Settlement is now much shorter for off-plan purchases, so you have to be confident your mortgage professional can act quickly as the property completion date approaches. If you’re confident they will ensure loan documents are issued quickly, help you complete them correctly, ensure new accounts are properly set up and your loan is promptly certified for Settlement, there’s nothing for you to worry about!




Share this article

Award Winning Mortgage Professionals

MO'R MORTGAGE OPTIONS