Beware 'risks' of new builds

by Caroline Dann24 Sep 2012

1300’s John Kolenda says borrowers should ‘get the facts’ and understand the risks before taking advantage of new government grants for constructed properties.

He made the comments after both the NSW and Queensland governments scrapped their first home buyers’ grants, replacing them with $15,000 construction grants.
Kolenda said committing to a new build presented problems for borrowers whose circumstances change during the construction.
“You are committing to a purchase that could be as much as 15 months away,” he said.
“This allows you to save more deposit which is great, but it also exposes you to risks like falls in the market or losing your job in the meantime and then you have trouble getting a loan approved.”
He said additional costs associated with new builds, particularly for apartments, made ‘expert’ advice even more crucial.
“It is certainly important that the government supports the building of new homes, but the lack of life and financing experience makes it especially important for first home buyers to have the assistance of relevant experts.”