How to Finance Your Property in a Pre-Sale

for sale

Buying your property in advance has important advantages for you and for the developer. An example is that by selling the properties before the builders put the first stone, the developer gets fresh capital to build and you gain time to gradually pay down payment, which is usually 30% of the property price.

Another advantage is that, depending on the progress of the work at the time of signing the contract, the developers offer preferential prices to their buyers; with up to 20% lower cost than the finished property. This translates into an opportunity to increase the value of your home.

who Finances a Presale?

The funding for the presale would come directly from a real estate developer. If this is not possible, there is an alternative, the bank. Bank currently only offer this type of credit in their plans for Rate and Timely Payments. Rate starts with low monthly payments that increase during the life of the loan and also has a rewards program for timely payment which is to reduce the interest rate and term. Meanwhile, Timely Payments scheme has a fixed monthly fee and a declining interest. The pre-credits can provide up to 90% of the property value. The loan terms are 10, 15 and 20 years for Rate and 7, 10, 15 and 20 years for Timely Payments. In the first three years interest rates range from 8.75% and 11% depending on the term. Subsequently they are adjusted for or against, depending on the timeliness of payment.

how Credit Works for pre-Sales?

The bank will have your back while you go to work to pay the developer. There may be up to three ministrations but never before reaching the 30% advance in the case of a house, and 50% in the case of departments. To determine the progress of the work, the bank makes a technical report that has a cost of 1% of the loan amount with a maximum cap of $12,000.

Regarding payments, your monthly payments will be proportional to the share of resources that the bank has delivered to the Developer. This gives you a margin of savings for when you have to meet the full monthly payment.

when is the Deed Done if it is a pre-Sale?

If funding is awarded by the developer, the deed is done when the house is finished. The cost of the procedure and the tax is calculated on the price at which you purchased during presale, ie you get a discount if it is formalized. When the presale of property is financed with a bank loan, when it is time for the deed, it works to guarantee payment. This is an advantage for you as titling costs are calculated on a lower value.

What happens when there is delay in construction?

It is important to review the penalties for failure to deliver on the contract. Regardless, the developer has a strong incentive to deliver as soon as possible in order to collect the ministrations from the bank or the remainder of the property price from the customer.

As you see, there are options to finance the purchase of a home in pre-sale and take advantage of better conditions but ultimately you have to check the history of the developer, the documents and select the best financing that meets your needs and plans.

Leave a Comment

Your email address will not be published. Required fields are marked *