What is a House and Land Package?

When a property developer buys land to build new homes, they will lay down the roads, utilities, water and sewage. From there, they will do one of two things. Either they will build a new home and sell it as a package deal (land and house) as a turnkey property, or they will build a display home and then have buyers choose their own block of land and the customisable features they want in their home. With the first package, you can borrow 90% of the completed property’s value. With the second package, you can borrow 95% of the land’s value. 

How does a house and land package loan work?

The second option listed above is called a house and loan package. There are two components for this type of loan. First, there is the vacant land loan. The size of the land determines the amount you can borrow for this loan. However, usually, you can borrow 95%. The second component is the actual construction. This loan is a typical construction loan. Using the project cost, the bank will determine the size of the loan. Construction loans are drawdown loans, meaning the bank will release payment directly to the builder once each stage of construction is complete.

Application

With your loan application, you will need to submit the following documentation:

• Your two most current payslips
• Three forms of identification
• A recent credit card statement
• Three months worth of bank statements
• Proof of savings
• You will also need to provide all the documents required for construction loans, including
  • Building contract
  • Building plans and specifications
  • Contract of sale
  • Additional work quotes

When purchasing a home and land package and applying for a loan, consult with the experts at Mortgage House. We can help you decide if a house and land package loan is the right option for you, answer any questions you may have and help you fill out your loan application.