Tips for Buying a House and Land Package

Homes packaged with the land they’re to be built on are called House and Land Packages.

Below are a few tips to consider when purchasing a House and Land package:

Types of Packages

1. You purchase the land before the house is built

When buying the land first you will have to pay a deposit, of generally 10% of the purchase price, with the balance on settlement. This way you will only pay stamp duty on the land, rather than on the construction of the house.

In this structure, you will need two home loans – one for the land and one for the construction. Progress payments on the mortgage will need to be made at different stages of construction.

 

2. You buy the house already completed on the developers’ land.

If you decide on this option, all you need to do is give a 5% deposit, with the rest once the home is completed. There are no progressive payments with this option, which you can use to your advantage for either renting whilst the home is being built, or saving a larger deposit for the home loan.

Research your location and developer

  • What experience have they got and how long have they been in business?
  • How many packaged homes have they sold?
  • Get referrals, and ask the owners if they were satisfied with the workmanship.
  • Check on appropriate builder’s warranty and insurance cover.
  • Check if they offer a fixed price building contract, so you aren’t left with unexpected fees.

Selecting a Display Home

  • Walk through various display homes to compare designs and costs, along with workmanship and quality of materials.
  • Pay attention to the detail and finish of the home, such as painting, carpentry and tiling to check whether they are of a high quality.
  • Would you like to change a particular aspect of the house? Find out the extra costs involved and compare these with the price of the original design.
  • Ensure that all features, services and materials are listed in the contract, such as letterbox, driveway, clothes line, flooring etc.

What type of house and land package should I buy?

It’s important when you are looking to purchase a house and land package to understand that there can be two different types. The first type is when you purchase the land before the house is built. If you choose this option you will need two home loans – one for the land and one for the construction. When you buy the land, the developers will usually require a deposit of around 10%. The advantage of choosing a house and land package such as this one is that you will only pay stamp duty on the land not the construction of your home. A construction loan that features progressive payments may be a suitable finance option when it comes to building your home. The other type of house and land package is one that already has the house built on the developer’s land. Progressive payments won’t be required with this option, and there is usually only a 5% deposit required, with the rest due once the home is completed.

Where is the best location for my new property?

It always pays to do as much research as you can when you‘re buying a home, and buying a house and land package is no exception. No doubt you will already have a location or two in mind, based on factors such as where you work and where your children go to school – or where you would like them to go to school. You may also have a location that is close to parkland, public transport or even shops high up on your list. Most property developers will tell you all that in their house and land package marketing, so it can come down to whether or not the house you like is in the area you like, and whether or not it is a good investment. Once you have chosen a house that works for you in an area that you like, we can help you determine if the quoted land and construction costs are reasonably priced. It can also be important to do some research into the property developer and understand their background and reputation. Ask for referrals from other clients and check for the appropriate warranties and insurance cover.

Low interest rate home loans

What is included in the cost?

It is important before you choose a house and land package to find out exactly what you will pay and when. Most house and land packages come with a series of inclusions for the quoted price. If you want extra features or better fittings, you may have to pay more. Landscaping, for example, can often not be part of the quoted price of a house and land package, and driveways may also be another add-on. All this should be clear when you speak to a sales consultant. It is also important to ask if the developer offers a fixed-price building contract. Not only can this make it clear what you are getting and how much it will cost, but it will also guard against any unexpected costs or fees. A contract such as this can also help you with your financing options. A good tip is to visit as many display homes as you can to get an idea of what you like, and what the developer can offer you.

How long will the construction process take?

How long your new home takes to build depends on a range of factors, such as the readiness of the land, the weather during the build, how complex a design the house is, how long it takes to get permits, whether the industry is busy at the time, and even how experienced your home builder is. All in all, these kinds of discussions are ones to have with your builder. When it comes to financing, if you choose a construction loan to build your home, you will have up to 24 months to complete construction after settlement.

What finances will I need?

It’s common to have two separate kinds of mortgages if you are buying a house and land package. The first is a regular mortgage for the land, remembering you will have to pay stamp duty as part of this purchase. Mortgage House has a range of home loan options for your land purchase. When it comes to building your home, a construction mortgage is the most popular option. A construction loan is very similar to a regular mortgage, but with one main difference. Instead of the bank or lender making one main payment to the builder, payments will be staged after a set of agreed milestones have been met. The benefit to you is that you only pay interest on the amount of money that has been paid out, which can save you money. Once your home has been built, a construction mortgage will revert to a normal home loan. While a construction loan is popular, you may find a regular mortgage is more suited to your circumstances. Contact our expert lenders if you have any questions about construction mortgages, and to find out more.