An off-plan property purchase usually requires a sizable deposit being made (up to 30% typically) and the necessary paperwork being signed to secure the purchase. The developer will have this documentation and it is up to the investor to fully pay the rest of the investment upon completion and the developer needs to fulfil the build on time. Ask for a timeline schedule from your developer. This schedule must be adhered to by any developer since buyers are also protected by consumer codes and standards set by governments.
Off-plan mortgages typically only last six months with a variety of specialist lenders available on the mortgage market. It is up to the buyer to renew their mortgage throughout the duration of construction. First time investors should best seek advice from mortgage advisors where available.
For buyers, problems arise with mortgages, especially if the price of developed property dips. In the event of the property price decreasing, so does the security against the mortgage. The buyer would then have to think about supplying money for making up the balance. If the buyer has no option but to back out of the deal, this can lead to possible legal disputes in the event of the developer reselling the property for less.
It may also be possible to obtain an equity loan to help buy off-plan properties. For example, the help to buy scheme from the UK government. However, seek the best advice possible when it comes to financing your investment.