Tips for Buying a House and Land Package

Understand the benefits

Buying a house is a big step, whether you’re first home buyers or you’ve done it all before. And choosing to become home builders can have its own challenges.

Finding the right block of land and searching through home designs and floorplan ideas for your dream home can be scary, especially if you’re doing it for the first time. But the good news is Mortgage House can help you every step of the way – from the time you meet with the land developer, through the building process, to the time you walk into your new house.

Mortgage House has a range of home loan options that can help you find the right house and land package for you and help you become home owners sooner.

The first thing is to do your research and enquire about whether a house and land package is a suitable option for you and your family. Whether you live in Melbourne, New South Wales, or Perth, or anywhere in Australia, there are single and double storey homes on blocks of land available.

And there’s a range of benefits to buying a home this way, including:

• Affordability. Buying a house and land package can be the most affordable way to buy a home in Australia.
• It’s all yours. When you buy a house and land package, you’re building a home just for you and your family. When you buy an established house, you’re buying a home built for someone else.
• Flexibility. House and land packages give you the freedom to build growth into them. You can choose bigger rooms or yards if you’re planning on having more children, or to accommodate them as they grow.
• Lots of options. When developers build house and land estates, they make sure there are lots of different-sized homes and blocks of land available.
• Friendly neighbourhood. Most new housing estates are built with families in mind, with quiet streets and lots of open spaces and parklands.
• Purpose-built areas. Whether you live in NSW, Victoria, Queensland or any other state, there are a lot of purpose-built housing estates that have the benefit of being brand new suburbs. For example, in Victoria, suburbs such as Truganina, Tarneit, Wollert or Clyde North are relatively new for residential development, and suburbs such as Wyndham Vale have expanded from existing areas. What this means is they attract new schools, new shops, new sporting areas and other infrastructure that makes them popular places to raise a family. Even places such as Mickleham or Kalkallo, Donnybrook and Melton South are turning from farmland to brand new suburbs. South West Sydney is another example.

There are different package options

When most people think of house and land packages, they think of one type. However, when it comes to financing, there can be two.

1. Buy the land before the house is built

When buying the land first you will have to pay a deposit of about 10% of the purchase price. This way you will only pay stamp duty on the land, rather than on the construction of the house. You will need two home loans – one for the land and one for the build. Progressive mortgage repayments will be made at different stages.

1. Buy the house already built on the developer’s land

If you choose this option, you’ll need a 5% deposit. There are no progressive payments with this option.

Choose a suitable loan

At Mortgage House, we’re big on tailoring a home loan to your individual needs. It makes it easier for us to find a suitable home loan for you. On top of that, our specialist technology and decades of experience helps make the process as simple as possible. That all leads to a range of different home loans options if you’re building a house, including:

• Construction Loan. These home loans are popular because you only make repayments after agreed building stages have been met, and you only pay interest on what you have paid out. It pays to be across the detail of construction for these kind of home loans, including and potential extra site costs.
• Regular Loan. A regular loan can help you pay for the block you want to build on.
• Variable Rate Loan. Interest rates can rise or fall over the life of the loan based on a range of internal and external factors.
• Fixed Rate Loan. Interest rates will stay fixed over the agreed period, usually between 1 and 5 years.
• Investor Loan. If you’re getting a house and land package as an investment property, these loans can be suitable.

Know how much your repayments will be

A mortgage calculator can help you find out what your repayments may be, depending on which home loan you choose. All you need to do is enter the details below, including the loan amount, interest rate and loan period, and whether or not you intend to pay back both the principle and the interest, or just the interest. From there, you’ll get an indication of what your repayments will be, and how much interest you’ll pay over the life of the loan.

Research the developer

When you’re looking to buy a house and land package, Google can be your best friend. It’s important to make sure you choose the builder and the developer that’s right for you. Here are a few tips that can help you find one that’s suitable for you.

• Expertise. What experience do they have, and how long have they been in business?
• Sales. How many house and land packages have they sold?
• Reputation. Try and get referrals and ask the owners of their homes whether they are satisfied.
• Paperwork. Check to ensure the builder has appropriate warranties and insurance cover.
• Fixed-price. Make sure the developer or builder has a fixed-price building contract, so you aren’t left with unexpected fees or costs.

Visit Display Homes

Another great thing about a house and land package is that you really can try before you buy. Display homes give you a chance to see how your new home will look, and allow you to see a large range of features and fixtures before you choose them. When you’re looking through display homes it’s worthwhile to consider:

• Comparing. Make sure you visit display homes from more than one developer or builder, and more than one of their display homes.
• Keep an eye out. Pay attention to the detail and the finish of each display home you visit. Look out for things such as painting, carpentry and tiling, and whether they’re of quality.
• Changing. If you like some things about a display home but not others, ask if you can make changes and how much extra they cost.
• Checking the contract. Find out exactly what is included in the contract and price.

Research the area

While it’s always important to research the developer, it can be just as important to research the homes available in the area you want to live. No doubt you will already have a few locations in mind, usually close to work, school, family or friends. Research what house and land packages are available in those areas, and whether they are suitable for you and your family. Don’t forget to think about the amenities. If you’re buying a house and land package as an investment, research the rental prices of the area, and homes that are similar to the one you are looking to buy.

Know your borrowing power

Before you start looking for a house and land package, understanding how much you might be able to borrow can be a huge advantage. It can give you an idea of what your maximum repayments may be, and how that fits in with your budget. Using a Borrowing Calculator, such as the one below, also has another benefit. It can help narrow or expand, your property search. Knowing your borrowing power can give you a guide as to the price of house and land packages to look for and help if you are thinking about adding or upgrading any features. Borrowing Calculators are only a guide, or an indication, not pre-approval for a home loan.